Analysts are predicting that troubled LCD display giant LG Philips
will finally report an operating profit in its second quarter results to be announced later this month.
"We expect LG Philips LCD to revert to black ink in the second quarter of 2007 and keep up its earnings improvement in the second half of 2007," said Jay Yoo, an analyst at Korea Investment and Securities
LG Philips has fought its way back into the black by cost cutting, and is being boosted by a general strengthening of LCD panel prices following many quarters of sharp price declines.
Prices of the raw materials used in LCDs are falling, and the biggest players are increasing production volumes.
But the turnaround has apparently come too late to save the partnership between Korea's LG Electronics
"Philips has already announced its intention to withdraw from the LCD panel business and is likely to sell its stake [in LG Philips] piecemeal," said Yoo.
"The possible purchasers include institutional investors, private equity funds and strategic investors."
The medium to large LCD panel business has moved over the past decade from a profitable niche to the most competitive in worldwide electronics.
Survivors, such as LG Philips, Samsung
have won out by expanding rapidly in all market conditions, and taking over smaller rivals.
In the longer term, analysts fear that the aggressive character of leading LCD makers will lead to further breakneck expansion.
"We believe that a capital expenditure spree may raise concerns of oversupply and drag down share prices," said Yoo.