There are new signs of weakness in the flat-panel TV business.
AU Optronics (AUO) shares are down sharply Tuesday after the Taiwan-based maker of LCD panels reported a sharp drop in June sales: on a consolidated basis sales in the month were 36.7 billion New Taiwan dollars, down 17.2% sequentially from May. The company said that “weaker than expected” June sales reflected “the cautious inventory control for semi-annual results by customers as well as the anticipation of uncertain seasonal demand under [the] current macro environment.” The company said shipments of large-sized panels for desktop monitors, notebooks, LCD TVs and other applications were down 12.9% sequentially. Smaller panels were down 2.7% sequentially.
For the second quarter, AU Optronics said, revenue totaled 123.6 billion NT$, up 16.5% year over year, but down 9.6% from the first quarter. The company said that the decline reflected lower-than-expected shipments and ASPs in both IT and TV panels.
The weakness at AUO seems to be bleeding into shares of LCD glass maker Corning (GLW). Corning is a large supplier of glass to AUO; in 2007 AUO was Corning’s single largest customer, accounting for 12% of sales.
Todd Rosenbluth, an analyst at Standard & Poor’s, Tuesday morning trimmed his 2008 EPS estimate on Corning by 2 cents to $1.84; for ‘09 his number drops a nickel to $1.90. He noted that “lower LCD panel prices used for TVs and computers will impact GLW’s customers, resulting in slightly weaker sales for its glass display segment in ‘08 and ‘09.” Rosenbluth repeating his Strong Buy rating on the stock, but cut his price target to $30 from $33.
AUO was down $1.38, or $8.8%, to $14.36; Corning was down $1.10, or 5%, to $21.12.