Sharp, one of Japan's oldest consumer brands, "needs a miracle" to recover from its current struggles, global investment banking firm Jefferies said on Friday.
Operating losses more than tripled to $1.5 billion for the fiscal year that ended in March, the Osaka-based firm reported on Thursday, blaming sliding demand for its liquid crystal display (LCD) panels, with sales of LCD televisions slumping an annual 23 percent during the year.
Taiwan's Hon Hai Precision or Foxconn, which paid $3.5 billion for a 66 percent stake in Sharp earlier this month, said job losses were on the cards in order to bolster efficiency and turn around the ailing firm. Sharp shares rallied 6 percent in early Friday trade following the news, while Foxconn shares rose more than 2 percent.
But Atul Goyal, senior analyst at Jefferies, said investors shouldn't get too carried away.
"I'm not too optimistic about Sharp. It's not just about their LCD panels, the problem is they have a lot of other consumer electronics businesses where Sharp is seeing 20-30 percent declines," he told CNBC.
Indeed, every main consumer product excluding camera models, recorded annual sales declines during the past fiscal year, with mobile phones down 24 percent, reflecting the saturated state of the global smartphone market.