LG Electronics May Sell LCD Stake
Jun 28, 2005
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LG Electronics Inc may sell a stake in LG.Philips LCD Co., a maker of liquid-crystal displays (LDC) monitors valued at U.S. $1.54 billion, a year after scrapping plans to sell part of its holding in the company's IPO.

LG Electronics may sell about 10 percent of the Seoul-based company when restrictions on selling the shares are lifted next month, Park Hyeong-il, an investor relations manager, said. Shares of LG.Philips fell by as much as 2.3 percent.

Royal Philips Electronics NV and partner LG Electronics abandoned plans to sell part of their 90 percent stake in LG.Philips amid a global slowdown in the LCD industry. Shares of LG.Philips, which this month won a $5-billion contract from Hewlett-Packard Co, have risen by 39 percent since the $1-billion IPO.

"It's became easier for them to sell their stakes in the joint venture as the prospects for the LCD market is improving after hitting a bottom in the first quarter of this year," said Chung Jae-yeol, an analyst at Good Morning Shinhan Securities Co in Seoul. "LCD panel prices are rising and the LCD TV market has picked up."

Samsung Electronics Co, considered the world's second-largest LCD maker after LG.Philips, in April raised shipment forecasts for the industry.

Morgan Stanley said on June 20 that LG.Philips LCD will turn profitable faster than earlier projected on higher-than-expected panel prices. LG.Philips will post consolidated net income, which includes earnings from overseas affiliates, of 1 billion won (approx. U.S. $1 million), compared to the consensus of other analysts projecting a loss of 44 billion won (approx. $43.4 million), Morgan Stanley said. The United States securities firm earlier projected LG.Philips would be unprofitable in the second quarter.

LG.Philips said in April an oversupply of LCDs that caused the company's first loss in 2 years will ease this quarter and demand will meet supply in the next 3 months. Expansion by Chief Executive Koo Bon-joon and his rivals in the $35-billion LCD industry had led to an oversupply, which drove first quarter prices down 41 percent from a year earlier.

The company had a first quarter net loss of 79 billion won (approx. $77.9 million), compared to profit of 628 billion won a year earlier. Shipments rose a greater-than-expected 24 percent from the fourth quarter.

Hewlett-Packard, the world's second-largest maker of personal computers, in June agreed to purchase $5-billion of flat-panel screens for notebook and desktop computers, becoming the South Korean company's biggest customer.

The U.S. company's commitment is the latest sign that demand for personal computers may be recovering after Gartner Inc, DisplaySearch and other industry research firms raised their forecasts for LCD and chip shipments in the past 2 months.

LG.Philips, which overtook Samsung Electronics in the latest quarter as the world's top maker of LCDs, is spending $4.6 billion on its factories this year.

LG Electronics is considering selling part of its 44.5-percent stake to strategic investors or financial institutions, Korea Economic Daily reported previously, citing unidentified industry officials. The company is discussing the sale plans with Philips, the report said. (China Daily)

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