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The Honolulu Advertiser
Posted on: Tuesday, August 15, 2006

Flat-panel TV sales are flat

By Yuri Kageyama
Associated Press

TOKYO Makers of slim TVs are struggling with higher inventories, but the extent of the problem depends on each company's position in the market: Smaller names are facing a glut of flat-panel screens while most of the top players say they're playing catch-up to avoid shortages.

The contrasting fates underline how some companies have successfully jockeyed to gain an edge in liquid-crystal-display TVs by strengthening their brands and exercising control over the production of flat panels used in their sets.

Both brand and control over production helped when this summer's World Cup failed to generate as much demand as had been expected. Electronics makers had timed the introduction of new sets to the matches, and retailers launched aggressive campaigns to sell new TVs.

Sony Corp. and Sharp Corp. of Japan as well as South Korea's Samsung Electronics fared well, while AU Optronics Corp. of Taiwan and LG Electronics of South Korea struggled. The Netherlands' Royal Philips Electronics NV, which has an LCD panel partnership with LG, also stumbled.

"There were winners and losers depending on the manufacturer," said Yoshio Tamura, senior vice president of the research firm DisplaySearch Japan.

Tamura pointed to Sony, Sharp and Samsung as examples of companies that have greater control over the panels that are a key and very expensive component of a TV set. They can raise or lower production to meet demand as well as fine-tune their sets to offer more fashionable features.

Despite the World Cup woes, analysts expect about 40 million LCDs to ship this year.

Although prices are dropping on flat-panel TVs, they're still steep compared with the cathode-ray-tube models. And buyers spending a couple of thousand dollars on a 40-inch or larger TV aren't about to snatch up just anything, said Mikio Katayama, who oversees Sharp's LCD business.

Sharp expects to sell 6 million LCD TVs worldwide in fiscal 2006, and Katayama is hoping to grab as much as about 30 percent of the U.S. market in 40-inch TVs during Christmas.

Sharp, which saw its April-June quarter profit soar 23 percent to $209 million, sold nearly 1.13 million LCD TVs worldwide during that period, up 50 percent from 755,000 LCD TVs the same period the previous year.

Sony, which has struggled to restore profitability in its TV operations after falling behind Sharp and others, is making a comeback.

Sony's LCD TV sales in the latest quarter were five times what it sold in the same period a year ago in terms of revenue, and a 350 percent jump in unit sales, according to the Tokyo-based manufacturer.

Samsung's unit sales of TV panels grew 30 percent overall in the latest quarter, while sales of 40-inch and larger versions jumped about 90 percent from the previous quarter.

It's another story for lesser-known brands.

Last month, Philips reported a 69 percent plunge in earnings for the quarter through June, blaming poor performance at its LCD joint venture with LG. Europe's largest consumer-electronics maker said the business had problems selling panels to other manufacturers that aren't part of the big-four brands.

LG racked up a second-quarter net loss, losing $10 million, compared with a profit of $156 million a year earlier.

And Taiwan's AU Optronics saw its second quarter net profit drop nearly two-thirds because of steep price declines to $5.54 million, compared with $14 million in the same period last year.

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