LG Philips Posts Fourth Consecutive Loss, Forecasts Rosier Future for LCD Makers

South Korean flat panel maker LG Philips reported this morning its Q1 2007 earnings, posting its fourth straight quarterly loss. The world's #2 LCD panel maker said it lost 169 billion won ($181 million), vs. a 47.5 billion won profit in Q1 2006 -- beating analyst consensus estimates of a 235 billion won loss. Sales rose 10% to 2.72 trillion won, ahead of analyst estimates of 2.61 trillion won. LCD makers have been hurt over the past year by falling panel prices coupled with rising costs. The company said LCD prices fell 9% in Q1, and will likely fall by a 'mid-single digit' in Q2, but that demand for LCD TV panels will exceed supply for the second half of 2007. Reuters says analysts see the company turning profitable again by Q3. Newly appointed CEO Kwon Young-soo said the industry should see a shortage of TV panels and a rebound in prices of monitor and notebook screens starting in the third quarter. Research company DisplaySearch says global shipments of LCD TVs will rise 56% this year, vs. 2.7% growth for total TVs and 33% growth for plasma TVs. Sony Corp. said this morning it expects a 50% surge in global LCD TV shipments. Shares have gained 18% thus far this year over investor anticipation of a recovery. Jung Ho of Daehan Investment Trust Management in Seoul: "If you agree with the recovery story, then it's time to buy."

Sources: Reuters, Bloomberg I, II
Commentary: LCD Market: Supply/Demand Balance Remains Out of Whack • Don't Expect LCD Prices To Recover Anytime Soon • Acquisitions the Only Way For LG Philips To Turn Things Around
Stocks/ETFs to watch: LG Philips LCD Company Ltd. (LPL). Competitors: Hitachi Ltd. (HIT), AU Optronics Corp. (AUO)
Conference call transcript: LG.Philips LCD Q4 2006 Earnings Call Transcript

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