LG.Philips LCD Co, the world's second-largest maker of liquid-crystal displays (LCDs), may report a record loss after screen prices fell and demand for televisions to watch soccer's World Cup missed expectations.
The panel maker probably had a second-quarter net loss of 238 billion won (US$252 million), compared with a 41 billion won profit a year earlier, according to the median estimate of 14 analysts surveyed by Bloomberg News.
Sales probably rose 15 percent to 2.3 trillion won.
LG.Philips, the first major producer to report earnings, will help investors assess the extent to which the industry overestimated sales from the world's most-watched sporting event, which ended on Sunday. Panel makers including LG.Philips, AU Optronics Corp (
"LCD-related shares are what I'm currently avoiding the most," said Jung Kyun-sik, who manages US$265 million at Shinhan BNP Paribas Investment Trust Management Co in Seoul.
"Everyone put in so much money into building capacity that oversupply was inevitable," he said.
Shares of LG.Philips, which have declined 28 percent this year, fell 2.1 percent to 31,000 won at the 3pm close in Seoul, where the company is based. The benchmark Kospi stock index gained 2 percent.
Forecasts from chief financial officer Ron Wirahadiraksa have triggered declines in the stock during each of the past three quarters.
Samsung Electronics Co, the world's largest LCD maker, reports on Friday. AU Optronics, the third-largest producer, reports on July 25, and No. 4 Chi Mei Optoelectronics Corp (奇美電子) discloses earnings on Aug. 10.
The second quarter's shipments trailed forecasts and panel prices declined more than expected, LG.Philips and AU Optronics said last month. Suwon, South Korea-based Samsung said demand from the World Cup did not meet its expectations.
Shares of LG.Philips, formed in 1999 as a venture between South Korea's LG Electronics Inc and Royal Philips Electronics NV of the Netherlands, tumbled a record 13 percent on June 13 after the company cut forecasts for earnings and TV-panel shipments.
The new projections triggered a drop in shares of other LCD makers that wiped out US$5.8 billion in market value for the world's five largest producers the following day.
Hsinchu, Taiwan-based AU Optronics also raised concerns the prior week among investors by saying second-quarter TV shipments would rise by half its projected growth, and prices would fall at double the pace that the company had anticipated.
AU Optronics disappointed again on July 7, when the company reported second-quarter revenue that missed all four analyst estimates in a Bloomberg News survey.
Average prices of LG.Philips panels probably fell 20 percent from a year earlier, outpacing the 14 percent drop in cash costs, according to ABN Amro Holding NV estimates last month. Prices will probably fall 18 percent for the year, according to the June 13 report.
Even so, shares of LCD-related companies have fallen so much that analysts at brokerages including Macquarie Bank Ltd and Merrill Lynch told investors last month to buy the stocks on signs the industry may have hit bottom.
Last month's comments by the panel makers contrast with the level of confidence in January, when Samsung and LG.Philips said they started production at their newest factories ahead of schedule to meet TV demand for the World Cup.
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