LG.Philips Stock HitMoon Ihlwan
Makers of liquid crystal displays are bracing themselves for poor performance in the second quarter of this year. LG.Philips LCD, a Korea-based company vying for leadership with crosstown rival Samsung Electronics in the manufacturing of LCD panels, said on June 13 its area shipments are expected to grow by a mid-teen percentage in the second quarter of this year from the first quarter, a downward revision from the previous guidance of a mid-to-high twenties percentage increase. The company says the average selling price per square meter of LCD glass at the end of the second quarter is expected to fall by a mid-teen percentage from a quarter earlier, compared to a mid-to-high single digit decline guided previously.
The revision forced a 13% plunge in LG.Philips’ stock on June 13, although it recovered by 2% on June 14. It is a second time in less than a week a major LCD panel makers has predicted a poor showing in the second quarter. One June 7, Taiwan’s AU Optronic, the world third largest producer of the panels, said shipments and selling prices would be worse than expected this quarter. (see BusinessWeek.com, 6/7/06, “LCDs Display Their Flaws”)
“While mid-to-long term demand for flat screen panels remains strong, we saw weaker seasonal demand during the second quarter, which has increased our inventory to about four weeks, a higher level than anticipated,” says Ron Wirahadiraksa, Chief Financial Officer of LG.Philips. For more on the LCD industry (see BusinessWeek.com, 6/13/06, “Taiwan Dogs Korea for LCD Shares”)