Summary: With the global LCD market continuing to face falling prices and an inventory glut, South Korea-based LG.Philips (NYSE:LPL) is expected to report a loss for the second consecutive quarter. After prices for its LCDs fell 18% last quarter, prices slid an additional 10% this quarter. What's worse, the world's largest LCD producer is expected to be in the red until 2007 negating the likelihood of a quick turnaround as some had predicted. In the meantime, top competitors like Samsung and AU Optronics (NYSE:AUO) have managed to downscale their inventories and largely avoid the pricing glut cutting into LG.Philips' profit margins. According to Korea Investment & Securities analyst Michael Min, "LG.Philips has a structural problem and it will take some time to fix it. The company is failing to control costs and has a relatively weak client base." Adds Jason Kang, a Daewoo Securities analyst, "I think a turnaround will come only in the third quarter next year or so."
Related links: Full article • LG Philips LCD Co., Ltd. Q2 2006 Earnings Conference Call Transcript • LCD Market Update: Caught in 'No Man's Land' • LCD Market Difficulties Lead AU Optronics to Consolidate, Ease Capacity • Trent's Takeaways for a Market in the Midst of a Sales Glut • LG.Philips LCD Misses Q2 Numbers, Issues Weak Forecast; Impact on Flat Panel Stocks?
Potentially impacted stocks and ETFs: Sony (NYSE:SNE), Toshiba (OTCPK:TOSBF), Sharp (OTCPK:SHCAY), Corning (NYSE:GLW)