LG Blames Flat-Panel For 85% Q4 Profit Decline

SEOUL, SOUTH KOREA — LG Electronics reported that its fourth-quarter net profit was down 85 percent due to price declines for flat-screen TVs.

LG's profit was $51.2 million for the fourth quarter that ended Dec. 31 vs. a profit of $228 million during the previous year's fourth quarter. Sales were down 11 percent to $5.87 billion from the previous year's fourth quarter of $6.51 billion.

In digital displays, sales decreased 29 percent vs. the third quarter due to "intensifying price erosion and year-end inventory control." LG reported that operating profit was down in the digital display category during the quarter due to lower plasma sales and flat-panel price declines.

In mobile communications, LG reported that sales were up 3 percent in the fourth quarter vs. the third quarter due to 3G export and open market growth. The company cited WCDMA shipments being up in the fourth quarter vs. the third quarter in North America and Europe. But operating profit declined slightly in the fourth quarter, again due to price cuts in some key areas, the company said.

For digital displays in 2007, LG said it is looking for rapid expansion of the 40-inch market, expected to be led by fast growth in LCD, and price erosion to intensify due to fierce competition among competitors. LG plans to increase its flat-panel market share by reinforcing Full HD included in its product lineup and "expanding channel coverage," the company said.

In mobile communications, LG expects the handset market to grow by 11 percent in 2007 to 1.05 million units. The company wants to have an "aggressive approach to advanced market demand [and] actively expand [its] GSM business." LG sees growth in North America with CDMA and WCDMA handsets.