UPDATE 2-AU Q3 profit tumbles as iPad hits laptop sales

* Q3 net profit T$227 mln vs forecast T$6.99 bln

* AU may post loss in Q4 – analysts

* Stock down 25 pct this year, TAIEX up 1.6 pct
(Recasts, adds details)

By Argin Chang

TAIPEI, Oct 27 (BestGrowthStock) – AU Optronics (2409.TW: ), the
world’s No.4 LCD maker, may post losses the year-end shopping
season after its third-quarter profit (Read more your timing to make a profit.) missed forecasts due to
weak TV demand and Apple’s popular iPad hit laptop PC sales.

The global economic recovery has faltered in recent months,
hurting sales of personal computers and flat-screen TVs and
dragging display prices lower. Analysts say the trend could
last into the fourth quarter and early 2011.

“In the whole U.S. market, PC demand is pretty weak, as
notebook computers are being replaced by the iPad. It’s looking
pretty slow into Q4 and into early next year,” said Michael On,
managing director of Beyond Asset Management.

Demand for LCDs turned weaker last quarter but LG Display
(034220.KS: ) outperformed rivals and showed strong shipment
growth last month due to its supply deals with Apple (AAPL.O: )
for the iPhone and iPad, according to industry tracker
DisplaySearch.

LG said last week the LCD sector was nearing the bottom as
the pace of panel price falls slows. But on Tuesday, Germany’s
Merck (MRCG.DE: ) cuts its full year sales outlook due to lower
orders for its LCD chemicals from TV firms. [ID:nLDE69J0UR]

“I am not optimistic because demand for PCs and TVs is
still not strong,” said Andrew Deng, analyst at Taiwan
International Securities. Deng did not rule out AU losing money
in the fourth quarter.

“You can see tech shares including AU have been weak
recently and that’s because investors have no confidence in
demand,” he said.

AU, a supplier to major brands such as Hewlett-Packard Co
(HPQ.N: ), Dell Inc (DELL.O: ) and Sony Corp (6758.T: ), reported a
July-September net profit of T$227 million ($7.41 million), its
smallest profit in three quarters.

That was sharply lower than T$7.4 billion in the same
period and well below a consensus forecast of T$6.99 billion
from 11 analysts surveyed by Thomson Reuters I/B/E/S.

“In the third quarter of 2010, the panel industry witnessed
inventory adjustments by the customers and lower-than-expected
panel prices,” AU Chief Financial Officer Andy Yang said in a
statement.

The cloudy outlook has driven investors away from AU and
local rival Chimei Innolux (3481.TW: ), which was created by a
three-way merger in March and has overtaken AU as Taiwan’s No.1
LCD maker.

AU shares have fallen 25 percent this year and closed flat
on Wednesday before the company’s results came out. Chimei
shares are down around 18 percent and Taiwan’s main TAIEX share
index (.TWII: ) has gained about 1.6 percent.

AU said it expects TV panel prices to decline in the fourth
quarter from the third quarter, while PC panel prices could be
slightly higher in most models. Shipments of PC and TV panels
in the fourth quarter would be up slightly.
($1=T$30.9)
(Writing by Baker Li; Editing by Lincoln Feast)

UPDATE 2-AU Q3 profit tumbles as iPad hits laptop sales