July 11, 2006 2:37 PM PDT
LG.Philips posts record loss
For the three-month period ending June 30, the Dutch-Korean joint venture reported a net loss of 322 billion won ($341 million), compared with a profit of 41 billion won in the same period last year.
The company experienced a 0.3 percent increase in sales for the second quarter of 2006, a 6 percent drop compared with the first quarter.
CEO Bon Joon Koo acknowledged the company's second-quarter difficulties, blaming industrywide price cuts and increased inventory levels. He indicated that LG.Philips would increase production in notebook and monitor screens and slow down production of TVs.
"The decision to continue evaluating any further investment in a next generation and invest in a multipurpose Gen 5.5 facility, which will be housed in our P8 facility, demonstrates our resolve to both adapt to changing market conditions and to make timely investments to meet our customers' forthcoming needs, particularly in the expanding wide format notebook and high-end monitor segments," Koo said in a statement.
Market research firm iSuppli said the flat-panel supplier's poor showing was not unexpected, as 32-inch LCD TV panel prices have sunk from an average of $541 in the first quarter of this year to $456 in the second quarter. Prices are currently hovering around $400.
"We've been tracking panel prices throughout (the second quarter), and we saw drastic panel price reductions. Overall, World Cup sales were not up to expectations, and unit shipments did not increase that much," said Sweta Dash, director of LCD and projection research for iSuppli. "When you add up all of that happening in (the second quarter) it is expected it will be bad."
Dash said although the current situation looks bleak, the next few months should bring better news for flat-panel suppliers. iSuppli anticipates that 17-inch monitor panel prices will stabilize in July and increase in August, and notebooks to stabilize in August and increase in September.
"We do expect the market to stabilize in (the third quarter) but the thing is, panel prices have gone down so much that it will take time before the market has a comeback to recovery...So we are expecting more increase in (the fourth quarter)," Dash added, echoing LG.Philips CFO Ron Wirahadiraksa.
"Looking ahead, we expect to see prices begin to stabilize and anticipate sustained growth in consumer demand for LCD TVs in the second half of 2006, particularly in the fourth quarter," Wirahadiraksa said in a statement.