We've all been hearing for a few months now that the flat-panel market was going to bottom out around the middle of 2005 and then begin to recover. While it's certainly too soon to have anything like complete confidence that this prediction has come true, Monday's results from panel maker LG.Philips (NYSE:LPL) are a positive step.

Whether you think LG.Philips had a good quarter or not depends largely on your point of view. On a year-over-year comparison, the numbers still look dreary. On a sequential basis, though, there was improvement, and bulls on the industry will no doubt point to this as a sign of stabilization and eventual recovery.

Sales climbed 12% for the quarter on a sequential basis (dropping 1% on an annual comparison), as the company shipped more large/wide panels. According to the company, it exited the quarter with nearly one-quarter of the market share for large panels, and sequential shipments rose 14% (measured in square footage).

Operating income was positive for the quarter, reversing a loss in the prior period, but dropping sharply from the year-ago level.

Perhaps wisely, LG.Philips management confined its guidance primarily to the next quarter, when it expects total shipments to rise in the mid-teens and average selling prices (ASP) to climb by single digits. Both of those numbers are in comparison with the prior quarter, not the prior year's comparable quarter.

As Rich Smith discussed on Friday, the two parent companies of LG.Philips -- Korea's LG Electronics and The Netherlands' Philips Electronics (NYSE:PHG) -- are both selling part of their stake in the company, and the company itself is looking to raise more money to fund ongoing capital expenditures.

Ongoing capital expenditures are part of the arms race in this industry, as Samsung and Taiwan's AU Optronics (NYSE:AUO) are making similar moves to stay in the game. Of course, that raises the specter of yet another supply glut in the future -- one that LG.Philips' increased business with Hewlett-Packard (NYSE:HPQ) may or may not be able to absorb.

There's no question that flat panels are in demand, but the jury is still out as to whether any of the manufacturers will be able to achieve a stable, competitive advantage and persistent growth. If they don't, the cyclical roller coaster will continue.

For more flat-panel Foolishness:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned.