AU Optronics (AUO) of Taiwan is the world’s No. 4 maker of thin-film transistor liquid-crystal display panels, more commonly known as flat screens. AU Optronics sells to iconic brands such as Hewlett-Packard (HPQ), Dell (DELL), and Sony (SNE). But the market for flat screens is saturated in most developed countries.
The company registered a net loss of $473 million in the first quarter, far worse than analysts’ expectations and reversing a profit of $248 million from a year earlier. Revenue dropped 16 percent to $3.17 billion.
Slumping flat-panel prices and a strong Taiwan dollar hurt results. The world’s No. 1 flat screen maker, Samsung Electronics (SSNLF), and No. 2 LG Display (LPL) also suffered through weak earnings in the first quarter.
Japan’s tragic natural disasters in March sparked a cut in production, but demand was too weak to compensate even for reduced supply.
Flat screens may soon be obsolescent. Newer model video monitors include energy-efficient active matrix organic light-emitting diode (AMOLED) technology, already utilized in upscale smartphones and computer tablets.
Some experts say the flat panel TV market peaked in 2010 and will slump 3 to 4 percent annually in coming years. AU Optronics and Samsung are using the time they have left to sue each other over patents.
Goldman Sachs analysts reportedly downgraded AU Optronics shares to neutral from buy. The bank expects the company’s capital expenditures to fall 9 percent this year and that the company could register a loss for 2011.
AU Optronics itself has a much sunnier forecast. It predicts a 10 percent increase for TV panel shipments in the second quarter from the first and a 60 percent increase in smartphone panel shipments for the year.
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