With LCD makers still trying to work off a global glut of supply and capacity, the world's second-largest manufacturer got a little boost on Tuesday. LG.Philips
Under the terms of the agreement, LG.Philips will become HP's primary supplier of flat screens for notebook PCs and LCD monitors. The $5 billion deal doesn't completely exclude other providers, and there are no guarantees with respect to future HP sales. Though LG.Philips was already doing business with HP, this should provide a double-digit boost to sales.
To meet the demands of this new agreement, LG.Philips announced that it will be increasing production on its sixth-generation lines and ramping up production on seventh-generation lines as well.
The dust is nowhere near settled, but on first blush, this doesn't look too good for AU Optronics
By coincidence, AU Optronics reported its May sales today. Looking at the report, investors will find 3% sequential growth in large-panel shipments (large panels are used in monitors, notebooks, TVs, and the like) and a 5% sequential decline in small-panel shipments -- continuing the trends we've seen for some time. While AU Optronics didn't include year-over-year shipment comparisons, it did report that year-over-year sales in May were down by nearly 8%.
Whatever the state of the LCD market, LG.Philips investors haven't waited for an "all clear" to push these shares up -- the stock hit a new high today. While the stock seems pretty fairly valued for the market it's in, I won't argue with a hot stock that just struck a major deal.
These Foolish takes won't leave you flat:
- Sharp's Enormous LCD TV
- Can Flat Panels Level Off?
- Universal Displays Its Potential
- LG.Philips' Mixed Signals
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).