AU shares fall after poor Q3 profit and weak outlook

TAIPEI Oct 24 (Reuters) - Shares of AU Optronics Corp (2409.TW), the world's No.3 LCD maker, fell more than 3 percent to a more than five-year low on Friday, a day after it reported a poor third-quarter profit and flagged a weaker fourth quarter. At 0143 GMT, AU (AUO.N) shares had dropped their daily limit of 3.3 percent to T$24.80. Smaller rival Chi Mei Optoelectronics Corp 3009.TW, whose quarterly profits are due out later on Friday, was also limit down at T$14.75.

Both the electronics sub-index .TELI and the main TAIEX .TWII dropped 3 percent.

(Click [ID:nTP360330] for AU's earnings) "The illusion of panel price bottoming is being shattered as our checks show monitor demand is rolling over on order cuts from OEMs and TV price elasticity is muted due to macro weakness," Merrill Lynch wrote in a research note on Friday.

AU and Chi Mei, the island's two biggest LCD makers, supply liquid crystal displays (LCDs) to global PC brands, including Dell (DELL.O) and Hewlett-Packard (HPQ.N) and some TV sellers.

Merrill Lynch has a neutral rating on AU and lowered its target share price on AU by 19 percent to T$29, based on a price/book ratio of 0.8 times its 2009 earnings. (US$1=T$33.3) (Reporting by Baker Li, Editing by Anne Marie Roantree)