Investor confidence in Japan-based Sharp was hurt after the Apple supplier warned it might be short of its guidance for earnings for the full year, due to being squeezed by profit margins on its smartphone and television displays.
The warning on Monday came as the display makers from Japan, including Japan Display and Sharp buckle under the intense competition from rivals in Asia that have driven down the prices of panels.
Trouble at Sharp has been increased by the weaker yen in Japan. That has cut into profit from products such as refrigerators and air purifiers made abroad and sold in the Japanese market.
Sharp issued a prepared statement later that said it had taken under consideration the cutting of its forecasts, without the disclosing of any new targets.
It is currently projecting net profit of 30 billion yen or $256 million. The report by Nikkei says that Sharp would have an operating profit for the full year of 50 billion yen, half of the amount it forecasts now.
The company was hoping increased sales to smartphone makers in China would drive the turnaround, following a loss of close to $80 billion for its combined fiscal years 2011-2012.
The company now generates close to 65% its sales for displays from small as well as medium panels used in tablets and smartphones as it lowers its exposure to larger TV panels with margins that are very thin.
Signs of a recovery emerged after Sharp eked out a tiny profit in its most recent fiscal year, but analysts have said its targets annually have been too optimistic due to the increase in rivals across Asia.
Earlier in January, the CEO of Sharp Kozo Takahashi said the company was experiencing increased negative impact due to the decline in the yen.
At that same time, the CEO admitted that the liquid crystal display goals for the period between October and March appeared tough to reach.