LG.Philips Shares Jump as First-Quarter Results Beat Forecast

Shares in LG.Philips LCD jumped more than 5% early on Wednesday, a day after the flat screen maker reported a smaller-than-expected quarterly loss and gave a positive outlook for
the rest of 2007.

LG.Philips reported after Tuesday's market close a 169 billion won (US$181 million) net loss in the first quarter, better than a consensus forecast of 235 billion won shortfall, on the strength of cost reductions.

The world's No.2 maker of large-sized liquid crystal displays (LCD) also said it aimed to break even on a monthly basis during the current quarter, a faster timescale than many analysts had expected.

Several brokerages upgraded their views on the company following the results. JPMorgan raised its 2007 and 2008 earnings forecasts, citing recovering panel prices and cost cuts. Lehman Brothers also upgraded its rating to overweight from equal weight.

"The company appears more confident that panel price declines are decelerating, and it has been impressive in cost reductions," said Jae H. Lee, an analyst at Daiwa Institute of Research, who also raised his rating to outperform from hold.

The display panel market is expected to tighten in the second half as weak profitability has kept LCD makers from ramping up production and as demand for sleek flat-panel televisions picks up in the run up to the holiday season.

"The ongoing recovery in the LCD industry is likely to last for a while," said Song Myung-sup, an analyst at CJ Investment & Securities. "LG.Philips could show a rapid improvement in earnings starting from the second quarter."

LG.Philips Chief Executive Kwon Young-soo said the industry should see a shortage of TV panels and a rebound in prices of monitor and notebook screens starting in the third quarter.

LG.Philips, which competes with home rival Samsung Electronics and Taiwan's AU Optronics, has been working to cut costs to offset falling panel prices and boost output from existing production lines.

It expected its margin on earnings before interest, tax, depreciation and amortization (EBITDA) to be in the low 20s percent in the second quarter, against 19% in the first.