LG Display Profit Slide Blamed On Slow iPhone Sales
LG Display has posted a notable profit decline which is being blamed on the slow uptake of the iPhone 5
Slow sales of the iPhone 5 are being blamed for the profit slide at LG Display, triggering yet more concern about Apple’s upcoming financials later today.
During the second quarter of 2012, LG pulled itself out of the red. And while it stayed there during this year’s first quarter, it announced Monday, the company did so with its lowest profits since returning to the black, Reuters reported 22 April.
LG Financials
According to analysts, the report added, Apple provides roughly 30 percent of LG Display’s revenue.
LG Display’s net income for the quarter was $3.1 million (£2m), according to the Associated Press, which cited Hanwha Securities as estimating that LG Display’s iPhone screen sales had fallen by 42 percent, compared with the quarter before, while iPad screen sales fell by 31 percent.
In March, Sterne Agee analyst Shaw Wu lowered his expectations for Apple’s second quarter. In an 22 April research note, Wu wrote that, based on supplier checks, he expects Apple to “hit the lower-end of [the firm’s] guidance range of $41-$43 billion (£27bn – £28.2bn) in revenue … operating expenses of $3.8bn-$3.9 billion (£2.5bn – £2.6bn) and other income of $350 million (£229m).”
Sterne Agee expects sales of 32.5 million iPhones, “versus consensus at 34 million,” 18.5 million iPads and 3.85 million Macs, Wu added.
In January, Apple announced the results of its fiscal first quarter, which ended 29 December and included revenue of $46.3 billion (£30.4bn) and sales of 47.8 million iPhones and 22.9 million iPads.
After the closing bell following Apple’s January announcement – which still managed to disappoint Wall Street – Apple’s stock plummeted, reducing the company’s worth by nearly $50 billion (£33bn). Analysts opined that Apple’s narrative ever-increasing growth was finally over.
Apple Problems?
Informa Telecoms & Media analyst Andy Castonguay wrote in a 24 January report that Apple’s performance had been hampered by supply chain results, but also increasing competition from Samsung.
He added that something was off at Apple.
“Apple’s products have begun to lose their ‘innovative’ top luster,” wrote Castonguay, “even while still representing the competitive standard in the industry.”
Apple CEO Tim Cook has dismissed the practice of using any one company’s data points to assume anything about Apple.
During Apple’s January earnings call, Cook addressed a question about whether iPhone sales were, in the face of competition from Samsung and possibly others, slowing from their usual pace.
“Even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it means for our business,” Cook said, “because the supply chain is very complex and we obviously have multiple sources for things – yields may vary, supply performance can vary, the beginning inventory can vary.”
Apple is expected to introduce this year not only a refresh of the iPhone 5 but a less-expensive iPhone for developing markets with strong prepaid sales. It’s also expected to introduce a television.
Sharp, which in March sold a 3 percent share of the company to Samsung for $111 million (£73m), makes liquid crystal displays for mobile phones, as well as notebooks and televisions.
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Originally published on eWeek.
