UPDATE 1-AU Q4 loss worse than expected; cloudy outlook

* Q4 net loss T$11.34 bln vs consensus loss T$6.48 bln

* Sees Q1 TV panel shipments flat to slightly down

* Stock slips 0.9 pct before results (Recasts, adds company and analyst comments)

TAIPEI, Jan 27 (Reuters) - Taiwan's AU Optronics Corp (2409.TW), the world's No.4 LCD maker, posted a worse-than-expected loss in the fourth quarter, hurt by weaker demand that pulled panel prices lower and by a strong Taiwan dollar and customer inventory control.

That could dim the prospects for AU (AUO.N) in early 2011 as the display sector continues to struggle with sluggish sales of personal computers and flat-screen TVs that require liquid crystal displays (LCDs).

AU Optronics (AUO.N) and other major LCD rivals in Asia are struggling with sluggish sales of personal computers and flat-screen TVs that require liquid crystal displays (LCDs).

South Korea's LG Display (034220.KS), the world's No.2 LCD maker, last week warned of lower shipments and weaker screen prices after posting its first loss in seven quarters. [ID:nTOE70I05E]

"We see TV panel shipments will be flat to slightly down in the first quarter," AU CFO Andy Yang said in a conference on Thursday. "but PC panel shipments will be slightly up."

AU, which supplies major brands such as Hewlett Packard Co (HPQ.N), Dell Inc (DELL.O) and Sony Corp (6758.T), on Thursday reported a net loss of T$11.34 billion ($390.4 million) for October-December. It was its first quarterly net loss in a year.

That compared with a net loss of T$7.9 billion in the same period a year earlier and a T$227 million profit in the previous quarter. AU was expected to report a fourth-quarter net loss of T$6.48 billion, according to a consensus forecast by Thomson Reuters I/B/E/S.

"The LCD sector should have bottomed but the recovery will take place at a slow speed," said Mike Fang, a fund manager of Paradigm Asset Management.

He said the demand from Europe was soft as consumers were waiting for the price of LCDs to come down.

AU reported the results after the Taipei stock market closed on Thursday. AU shares fell 0.86 percent versus the main TAIEX's .TWII 0.52 percent rise.

After trading flat for several months, AU shares have fallen about 5 percent since the start of the year, while the broader market has been little changed.

Shares of local rival Chimei Innolux (3481.TW) have lost more than 9 percent so far this year. Chimei was created by a three-way merger last year and has overtaken AU as Taiwan's No.1 LCD maker. (US$1=T$29.05) (Reporting by Argin Chang and Clare Jim; Editing by Dhara Ranasinghe and Jacqueline Wong)