AUO:US
AU Optronics Corp
Shah of JPMorgan Sees `Strong Outlook' for AU Optronics: Video
Oct. 23 (Bloomberg) -- Bhavin Shah, head of global technology research at JPMorgan Chase & Co., talks with Bloomberg's Catherine Yang from Ahmedabad, India, about AU Optronics Corp.'s fourth-quarter earnings forecast, the outlook for technology companies and impact of a possible U.S. recession on the industry. AU Optronics, the world's third-largest maker of liquid-crystal displays, said profit may slip in the current quarter. (Source: Bloomberg)
AU Optronics Posts Record Profit on Display Prices (Update3)
By Tim Culpan and Chinmei Sung
Oct. 22 (Bloomberg) -- AU Optronics Corp., the world's third-largest maker of liquid-crystal displays, posted a record quarterly profit after prices rose as the company sold more panels used in televisions.
Third-quarter net income jumped to NT$22.6 billion ($694 million), or NT$2.89 a share, from NT$612 million, or 10 NT cents, a year earlier, Hsinchu, Taiwan-based AU Optronics said in a statement today. Profit beat the NT$19.1 billion average of 12 analysts' estimates compiled by Bloomberg.
AU Optronics joins Samsung Electronics Co. and LG.Philips LCD Co. in reporting higher profits after they took market share from rival plasma and glass-tube display makers. Chief Executive Officer H.B. Chen said the company will probably post similar profit this quarter, more than analysts expect.
``Everybody's now looking for a better-than-seasonal fourth quarter,'' said Sean Wu, who rates AU Optronics as ``neutral'' in coverage for Nomura Securities Co. in Taipei. ``The risk is that panel prices will fall in the second-half of this quarter as we move into low season.''
Shipments of large panels, which measure greater than 10- inches in diagonal length, climbed to a record 22.3 million units with the average price rising to $173 in the quarter from $153 a year ago, the display maker said. Sales for the quarter almost doubled to NT$137.96 billion from NT$71.3 billion a year earlier.
Television Panels
Panels used in televisions accounted for 42 percent of sales, up from 36 percent a year ago, with those panels selling for an average $334 each compared with an average $122 for each panel used in computer monitors, the company reported.
The gross margin, or the percentage of sales left after deducting the cost of goods sold, rose to 23 percent from 8.3 percent a year earlier, the company said. Gross margin will ``fall slightly'' this quarter while sales may rise a single- digit percentage point from the third quarter, Chen said.
His forecast of similar profit this quarter surpasses the NT$14.2 billion estimate of 11 analysts compiled by Bloomberg. Today's profit announcement marks the second consecutive quarter where earnings beat estimates.
AU Optronics's capital spending may rise to about NT$90 billion next year from NT$70 billion this year, Chief Financial Officer Max Cheng said. The company originally forecast about NT$90 billion in spending for this year, and NT$70 billion next year.
``The payment schedule has been delayed, but the capacity expansion is still the same,'' Cheng said.
Shipments of panels used in televisions may grow by a ``low- teen'' percentage this quarter, while prices for those panels will fall by a ``low single-digit'' percentage, the company said.
AU Optronics, which currently trades at 19.5-times estimated 2008 earnings, has climbed 57 percent this year to close at NT$69.60 today in Taipei. The benchmark Taiex has added 20 percent.
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