LG Display Faces Fierce Competition

Computer and digital TV display manufacturer LG Display (LPL) is a downtrodden stock with potential for future positive results. At this point, though, the company faces fierce competition in its markets as it waits for new technology to boost sales and profits.

LG Display is a South Korean company which produces thin-film transistor liquid crystal displays, called TFT-LCD, for use in digital televisions, smartphones, computer monitors, laptop computers and tablet computers. In 2011, 48 percent of the company's production went into TV products and about 20 percent to monitors.

South Korean electronics company LG Electronics owns approximately 40 percent of the equity in LG Display. Each LPL ADR share is worth half of a Korean share of LG Display.

For the third quarter of 2011, LG Display reported revenues 6 percent below the same quarter in 2010, but sales were 4 percent above the 2011 second quarter results. The company posted an operating loss for the quarter equal to 8 percent of sales and, for the first nine months the year, operating losses equaled 4 percent of revenues.

In the first three quarters of 2010, the company earned operating profits of 9 percent of revenues. The management of LG Display does not break out earnings results on a per share basis.

Varied forecasts

Approximately 25 analysts around the world — only three in the United States — follow LG Display. The consensus earnings estimate for full year 2011 is a loss of $1.05 per share, compared to a profit of $1.42 in 2010.

The estimates for 2012 range from a loss of more than $2 per share to a profit of $1.80. The biggest challenge in the LED display business is rapidly falling prices due to the large number of manufacturers in the space.

The future for LG Display may be dependent on how fast the electronics industry switches to active-matrix organic light-emitting diode (AMOLED) displays, where the company is building a leading presence.

Recently, HSBC analysts upgraded LG Display to overweight from underweight on the assumption demand for LED TVs will improve.

The company next reports on March 28.