LG Display’s relationship with Apple Inc. was a significant factor in its most recent earnings results, but the market seems split on whether that is an asset or a liability.
Some analysts say LG Display, which reported a net profit of $3.1 million for its March quarter, got a “boost” from Apple. The display company reported a loss in the comparable year-ago period.
Others, including Reuters, say LG was “hamstrung” by the relationship. LG Display reported an operating profit of $135 million, the news agency reports, which topped forecasts. However, Reuters added, earnings sank 74 percent below the results for the fiscal first quarter, the lowest level since LG's return to profitability.
The dour quarter was blamed on a seasonal slowdown in demand and weaker sales to Apple, which accounts for around 30 percent of LG's revenues, according to analysts. LG supplies display screens for Apple's mobile devices.
Apple is a demanding customer and sources displays from only and handful of suppliers, including Samsung Display and Sharp. Analysts said LG Display is expected to generate about two-fifths of operating profit this year from sales to Apple, and it has to widen its client base for longer-term growth. However, LG is well-positioned to pick up additional business from Apple if Apple’s relationship with Samsung continues to decline in light of patent litigation between the two consumer giants.
Analysts said sales of organic light-emitting-diode displays, the next-generation display technology, are unlikely to drive LG Display’s earnings anytime soon because the company has yet to boost production yields. LG Display makes OLED screens for 55-inch television sets for LG Electronics.
