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Friday, January 16, 2009

LG Display (LPL)

Operating loss worse than their December 10th re-guide down. Panel prices dove 23% in Q4 on 5% shipment growth. Co expects panel shipments down mid single digits for 1Q:09. Believes the "worst in terms of earnings" occurred in December, though prices will continue to decline in 1Q. Capacity utilization, presently at 60%, will rise to the mid 90% range in 1Q. Capex spending intentions down by 50%.

The Skew: Despite the uncertain spending environment and their inability to predict sustainability of a recovery, they'll be running production back up next quarter. Analysts are calling for a Q3 recovery. If LG is running higher production into uncertain demand, the company and/or analysts could easily be wrong about pricing recovery. No edge but seems risky. More interested in this company as a look-through to consumer spending and channel inventories.

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