Summary: With the global LCD market continuing to face falling prices and an inventory glut, South Korea-based LG.Philips (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 (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 (SNE), Toshiba (OTCPK:TOSBF), Sharp (OTCPK:SHCAY), Corning (GLW)
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