Sharp might dump its consumer business -

Word on the street is that Sharp might have to kill off its consumer business and downgrade its lot to being a component supplier to its Taiwanese partner Hon Hai Precision Industries.

According to Reuters, the century old Sharp is still insisting Hon Hai honour a money-losing deal to take an equity stake in the firm.

Investors have been wondering what Sharp is going to do with itself after its shares have lost nearly three-quarters of their value since the start of the year. It is also facing increased costs for its debts.

At the moment it is only functioning thanks to the backing of the Mizuho Financial Group and Mitsubishi UFJ Financial Group.

But those lenders are apparently leaning on Sharp to have closer ties to Hon Hai and the sale of non-LCD business to raise cash.

It will all come to a head next year when a $2.54 billion convertible bond matures in September. Sharp has a huge debt load and might need to raise cash earlier.

Meanwhile it is losing money and is relying on a cash injection of 66 billion yen from Hon Hai in return for giving it a 10 percent stake. The deal was agreed in March but has not yet been paid.

It seems that the share slump has meant that Sharp's stock is not enough for Hon Hai to honour a deal that values Sharp shares much higher.

Hon Hai confirmed that Sharp had already released it from the terms of the deal "due to the volatility of Sharp's share price". But Sharp insisted that it expected the Taiwanese firm to fulfil the original terms.  Digitimes reports that Hon Hai has reached a deal to renegotiate with Sharp.