INSTANT VIEW: LG Elec Q2 net jumps 84 pct, misses forecasts
SEOUL (Reuters) - LG Electronics Inc (066570.KS) reported on Monday an 84 percent jump in quarterly earnings, helped by high margins on mobile phones, brisk TV sales and solid results at its LCD joint venture.
LG, the world's fourth-largest mobile phone maker after Nokia (NOK1V.HE), Samsung Electronics (005930.KS) and Motorola (MOT.N), posted April-June net profit of 707 billion won ($696.5 million) versus 385 billion won a year ago.
The figure missed a forecast for 802 billion won by 10 analysts surveyed by Reuters.
*************************************************************
Following are some reactions from fund managers and analysts:
S.H. PAEK, FUND MANAGER, CJ INVESTMENT TRUST MANAGEMENT
"LG is doing terrific now. There are uncertainties over the second-half outlook, but their earnings should stay solid given that the global mobile phone market is still expected to grow about 10 percent despite the economic downturn. Concerns over the second-half slowdown have been priced into shares anyway."
"The lower-than-expected net profit was due to losses related to foreign currency debt, but LG will see a fall in such losses in the second half."
JOHN PARK, ANALYST, DAISHIN SECURITIES
"The major factor we need to look at from now on is its handset business. If (Apple's) iPhone sells more than expected, LG Electronics is going to face a situation where it will have to cut its high-end cellphone prices."
"LG Elec is the largest shareholder in LG Display, and a gloomy outlook for the display industry is making (LG Display's) prospects much weaker."
STEVE LEE, ANALYST, GOODMORNING SHINHAN SECURITIES
"Earnings came in line with our expectations, and the second half outlook doesn't seem as bad as many feared, as the company says it still expects double digit profitability in its handset unit. Certainly there are downside risks, most namely slowing economies, but I think they are about to hit bottom and get better from here. Besides, the latest share price falls have factored in the risks.
"Foreign currency volatility poses a major risk, as a stronger won KRW= will dent exporters' profitability, but I doubt the government can keep the won strong for long."
JASON KANG, ANALYST, DAEWOO SECURITIES
"There are several risks in the second half of the year to 2009, which are the global downturn of the mobile phone market, and the weakening display market due to a supply glut. Whether LG could maintain the high margins that it is seeing now for mobile phones is the big question for the latter half of the year.
"The success of iPhone will increase competition in the high-priced mobile phone market, which may hurt LG in the long-run, but it is positive in a sense that the market itself is expanding."
(Reporting by Angela Moon, Park Jung-youn, Park Ju-min and Rhee So-eui; Editing by Keiron Henderson and Jonathan Hopfner)
