LG Forecasts A Slide In Display Shipments For First Quarter 2013
Michael Harper for redOrbit.com — Your Universe Online
Following the unease after Apple´s final quarterly earnings call last evening, LG has said their shipments of LCD panels for iOS devices would slide in the first quarter of 2013. According to Bloomberg, LG is also blaming a strong won for their slumping profits.
LG has reported a net income of $299 billion US in the last quarter of 2012. Analysts were predicting the world´s second largest maker of LCD panels would report numbers as high as $340 billion US. Despite a slipping net income, sales saw a boost in the fourth quarter, rising 15 percent over the previous year.
LG´s slumping numbers echo earlier fears that Apple has been drastically cutting back their component orders, with some reports claiming that Apple has cut some of their orders “in half.”
According to Reuters, news of possible production cutbacks by LG could have caused some to claim that demand for Apple products had cooled.
“A strong industry recovery isn´t expected this year,” explained LG´s chief financial officer James Jeong, speaking to analysts. According to Jeong, profits in the first quarter will be lower than they had been in the previous fourth quarter. “We will continue to strengthen our specialty products portfolio and try our best to stay in the black.”
LG has also said some of their clients were cutting their orders. The Seoul-based company now says they expect their LCD panel shipments to drop by as much as 15 percent in the first quarter of 2013. A lessening demand for iPads could be partially responsible for this decline, as the company is said to provide as much as 70 percent of all LCD panels for Apple´s tablet.
“Some customers are adjusting their inventory and that will affect our panel shipments,” explained Jeong. “Along with overall weakness in demand due to a seasonal slowdown, we expect our panel shipments will decline by more than 10 percent and reduce first-quarter earnings.”
Jeong has said Apple is their largest customer when it comes to tablet panels, which accounted for 31% of their total display shipments last quarter. Now, Jeong says he expects these tablet screens to account for 25% of their business in the upcoming quarter following a typically hot fourth quarter. Apple may purchase a large majority of these tablet screens from LG, but according to one analyst who spoke with Bloomberg, the iPad mini screen in particular is no money-maker.
“The iPad mini business is little help to LG Display because of the low price point and razor-thin margins,” explained Daniel Kim, an analyst at Macquarie Group Ltd.
Yet, while all eyes are on Apple amidst the news of a predicted slow first quarter for LG, one unnamed source close to LG told Reuters that rumors of an extreme Apple slowdown are being exaggerated.
“Market concerns that (Apple) orders will tumble dramatically are somewhat overdone,” explained the source. One of these “overdone” reports, said the source, came from CLSA analyst Matt Evans who claimed that iPad orders will dramatically collapse from 12 million to a meager 2 million in the upcoming quarter.
“As Apple results showed today, iPad demand is much stronger than many had worried about and that’ll be reflected in suppliers’ first-quarter results,” finished the unnamed source.