Weak iPad, iPhone demand hits LG Display in the wallet
Apple shares below $400 for first time in 2 years
LG Display's profits have been hit by falling demand from Apple, forcing the firm to turn in its smallest profit since clawing its way out of debt in Q2 2012.
Apple shares are trading steadily under $400 for the first time since December 2011 (following a brief blip earlier this month) as investors sense a shift in the firm's once unassailable popularity, which in turn is hitting its suppliers in Asia.
LG Display said its operating profit was 151.3bn Korean won ($135m, £88.7m) in the first quarter, in line with analyst estimates, but this was 74 per cent less than the previous quarter's operating income. The panel-maker's net profit plummeted after the holiday season, dropping 98.9 per cent to 3.5bn won ($3.1m, £2m).
The Korean firm said the drop in profits was down to "seasonally weak" demand and supply adjustment. CFO James Jeong said the firm expects total shipments to lift by a "mid-to-high" single digit per cent in the second quarter.
The fruity firm is LG Display's biggest customer and is estimated to account for as much as 40 per cent of its revenues. That contract has been money in the bank for the display manufacturer in the past, but Apple has been struggling to maintain its stellar growth. Analysts expect the iDevice-maker to reports its first year-on-year decline in quarterly earnings for nearly 10 years when it reports tomorrow.
Cupertino has seen nearly $300bn wiped off its market value since its stock peaked at around $705 in September. A tidy chunk of that vanished on 23 January this year, when the share price dropped 12.4 per cent after Apple released its earnings.
While investors may be worried that iDevice popularity has run its course, Apple's stock price is still more than healthy and just a little innovation in the next iterations of iPhones and iPads, expected in July and October respectively, could inspire fanbois to start throwing their cash around again. ®