Bloomberg News

AUO Losses Continue as Slowing TV Demand Pushes Prices Lower

November 01, 2011

(Updates with revenue in the sixth paragraph.)

Oct. 25 (Bloomberg) -- AU Optronics Corp., Taiwan’s second- largest maker of liquid-crystal displays, posted its fourth- consecutive loss as prices dropped.

Third-quarter net loss was NT$15.8 billion ($525 million), the largest in 10 quarters, compared with a profit of NT$227 million a year earlier. The average of 18 analyst estimates compiled by Bloomberg was for a loss of NT$5.55 billion.

AUO’s continued losses highlight an industrywide oversupply of panels exacerbated by slowing demand for televisions and computers. Last week, larger rival LG Display Co. reported a record loss for the quarter as television manufacturers failed to get consumers to upgrade to sets that feature new technology such as Internet and 3-D pictures.

This year “has been the year of oversupply in the LCD industry,” Taipei-based researcher WitsView wrote in an Oct. 14 statement. “A weak global economy has severely impacted panel demand leading to uncertainty in the coming hot sales season of the fourth quarter.”

AUO rose 2 percent to NT$12.65 at the close in Taipei before the announcement, stemming its decline this year to 58 percent. The benchmark Taiex index has declined 17 percent.

Revenue at AUO dropped 20 percent from a year earlier to NT$98.9 billion, the company reported. Shipments of larger panels, measuring 10-inches or more diagonally, climbed 0.2 percent from the prior quarter, missing its own forecast for growth of a “low-single digit” percentage.

‘Loading Rate’

Prices dropped 2 percent from the second quarter to an average of $713 per square meter, it said in a statement today.

“Fourth quarter loading rate will be lower than the third quarter as we focus on inventory and cash flow,” Chief Financial Officer Andy Yang said at an investors’ conference today in Taipei, without providing a figure.

Market demand for larger size panels, used in televisions and notebooks, will decline further this quarter, while price fluctuations will be “more moderate,” he said. Demand for small and medium-sized panels will decline with seasonality while shipments for those used in mobile phones will remain “robust,” he said.

Global shipments of LCD TVs will climb less than previously forecast because of global economic uncertainty, NPD Group Inc.’s DisplaySearch wrote in an Oct. 11 press release. The Santa Clara, California-based researcher cut its 2011 LCD TV forecast to 206 million units, from 211 million.

--Editors: Anand Krishnamoorthy, Suresh Seshadri.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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