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Smartphones and mobile devices are all the rage as far as consumer buying activity goes, but not all manufacturers are seeing profits as a result of the booming industry. LG’s latest earnings call did not meet the analysts’ expectations for panels for smartphones and tablet computers in particular. The company reported today a net loss of $115.4 billion up to March 2011 in comparison with analysts’ forecast of $208.4 billion.
The report indicates a 8.7 percent fall to $5.37 trillion, and the situation is not expected to greatly improve, due to the seism in Japan that shook not only the archipelago, but also the business and IT&C world. Add to this the modest TV sales that led to a drop of the average price of LG’s products, amounting to about 17 percent in Q1.
Yet, the company is optimistic and emphasizes the possibilities of posting a profit in the second quarter, due to the demand for displays in mobile devices (LG is the manufacturer for Apple’s iPhone and iPads) and 3-D TVs.
“Their guidance for the second quarter is aggressive,” said Song Seong Yeob, a fund manager at Seoul-based KB Asset Management Co., which manages $21 billion in assets. “Given the numbers were better than the market consensus, the shares should be able outperform other technology stocks.”
What LG is betting its money is innovation. The company is currently promoting a technology called Film Patterned Retarder which uses polarized glasses to view 3-D images with visual information sent to both eyes simultaneously. The technology is a response to Samsung’s manufacturing of shuttered-glasses that produce a 3-D image by sending visual information to each eye sequentially. LG expects FPR to account for about half of its overall shipments of TV panels in the second half.
“We are seeing real demand pick up and also very encouraged by strong sales data from China, although it may not be felt by the same degree across the overall panel makers…But the overall condition is improving and our positive growth guidance for both volume shipment and price is a conservative one taking into account potential disruptions in supply from Japan,” said LG Display’s Jung.
But LG isn’t the only one to see drooping consumer activity. Slow sales in TV units was also felt by Philips Electronics, who decided to transfer its TV business into a joint venture with TPV Technology after reporting weaker-than-expected quarterly net profit. Competitor Sharp announced it suspended the production at 2 TV panel plants last week until early may due to slumping domestic demand for TVs and shortages of a gas used in panel production.
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