AU Optronics Beats Estimates in Record Q3

Taiwan's AU Optronics reported a new record for quarterly net income of NT$22.57 billion ($693M) or NT$2.89/share ($0.88/ADR), nearly a 36-fold increase y/y and exceeding analyst estimates ranging from NT$17B to NT$22B. Revenues climbed 30% q/q to NT$137.96B. Gross margins more than doubled to 23% sequentially and nearly tripled over last year. AU Optronics said average display prices increased 13% to $173 during Q3. Analysts say a significant drop in capex for new capacity is resulting in a tight supply situation for LCDs. Combined with an expected increase in demand ahead of the 2008 Beijing Olympics, it creates a positive environment for the display industry. AU Optronics CEO H.B. Chen said the company expects similar net income for Q4, with sales possibly rising a single-digit percentage over Q3 (full earnings call transcript later today). Analysts had been forecasting Q4 net income of NT$14.2B, according to Bloomberg. Ordinary shares of AU Optronics rose 0.3% to NT$69.60 ahead of its earning release. AU Optronics' ADRs lost 3% to $20.40 on Friday.

Sources: Press release, Bloomberg, Reuters, XFN-Asia
Commentary: LCD Maker AU Optronics Boosted By Strong Sales • AU Optronics Forecasts Profitability in Q2 on Rising LCD Panel Prices • The Skinny on Flat Panels: Reduced Capacity Could Mean a Strong '08
Stocks to watch: AUO. Competitors: LPL, BRLC, SNE, MC, PHG, SHCAY.PK, Samsung (see EWY). ETFs: EWT

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