Sharp's the action - FT.com Sharp is losing its, er, edge. The Japanese technology company - founded by the man who invented mechanical stay-sharp pencils - has cut its sales forecast for the year ending in March by almost a 10th, and downgraded a Y6bn profit outlook to a Y290bn ($3.8bn) loss. That lopped 16 per cent off the share price. The loss was inflated by charges from a Y120bn cut in deferred tax assets, the strong yen and supply chain disruptions from the Thai floods. But these just cloud Sharp's bigger problem - its reliance on liquid crystal display televisions, a slowing, commoditised product. Japan's largest LCD panel maker saw its sales of the product fall by a quarter in the first nine months as the panel division swung into losses. Audio-visual revenues, which include Sharp's LCD televisions, also shrivelled by a quarter. Operating margins in this segment fell 60 per cent as it slashed prices on large-screen products to keep up with market leaders Samsung and LG Electronics. The point is that Sharp has not done enough to diversify or update its panel technology. While the company is cutting LCD production, falling sales in other areas, such as solar panels and electronic devices, mean these divisions remain just a third of its business - the same as in 2007. Technology problems also delayed attempts to supply small LCD screens to Apple last year. This is unfortunate because Sharp faces serious competition from Apple's largest supplier, LG Display. Sharp has also been slower than peers in the shift to thinner, lighter, more durable and less costly OLED (organic light emitting diode) displays - where Samsung and LG Electronics are powering ahead. LCD TV shipments are expected to grow just 9 per cent this year, according to DisplaySearch forecasts, way down on two years ago. Sharp has rightly cut capital expenditure an average of 13 per cent each year for the past five. But if that goes on much longer, any edge will be lost.