LG Display Co. may report its first profit drop in six quarters because of a glut of liquid-crystal displays, foreshadowing an earnings slump in the $89 billion industry that may last until the middle of next year.

Third-quarter net income at the world's second-largest LCD maker fell 65 percent to 184 billion won ($145 million), based on the median estimate of 15 analysts surveyed by Bloomberg. The four largest producers led by Samsung Electronics Co. will all post their first profit decline from displays since the first quarter of 2007, according to the Bloomberg survey.

Overproduction, spurred by record earnings last year, has forced Seoul-based LG Display and Taiwan's two biggest LCD makers to scale back expansion plans as the credit crisis threatens to send the global economy into recession and sap demand for computers and televisions. CLSA Ltd. and JPMorgan Chase & Co. estimate the glut will persist until the end of 2009.

``The industry will have a hard time until the first quarter, and whether or not it turns around will depend on demand,'' said Park Sang Hyun, an analyst at HI Investment & Securities Co. ``With supply slowing, if demand picks up because of lower prices the industry should recover.''

Except for Samsung Electronics, also the world's second- largest maker of semiconductors and mobile phones, shares of the world's five largest LCD makers have halved this year. Samsung's stock has dropped 4.5 percent in 2008 in Seoul trading, compared with a 33 percent decline in the benchmark index.

Falling LCD Prices

The price of 42-inch TV displays fell 15 percent in the three months ended Sept. 30, the biggest quarterly drop in more than two years, according to data compiled by Taipei-based researcher WitsView Technology Corp. The LCD glut will peak in the first quarter of next year, when supply will exceed demand by 13 percent, CLSA said in a report last month.

Samsung, based in Suwon, South Korea, this month will report third-quarter operating profit from LCDs fell 49 percent to 342 billion won, according to a separate survey of analysts. Total net income at the company probably dropped 38 percent to 1.37 trillion won, according to the survey.

In Taiwan, profit at AU Optronics Corp., the world's third- largest LCD maker, may have dropped 65 percent to NT$7.84 billion ($242 million), while net income at Chi Mei Optoelectronics Corp., the fourth largest, may have fallen 67 percent to NT$4.49 billion, according to the analysts surveyed by Bloomberg. Both Hsinchu-based companies are scheduled to report earnings this month.

Top Japanese LCD maker Sharp Corp., which this month cut its annual profit forecast by 43 percent, probably saw operating profit from LCDs fall 41 percent to 11.7 billion yen ($117 million) in the quarter ended Sept. 30, according to Goldman, Sachs & Co. estimates this month.

Forecast Reduction

LG Display cut its forecast for third-quarter profitability on Sept. 10, citing the worsening global economic environment. Earnings may keep falling every quarter until the first half of 2009 as prices decline, UBS AG and Macquarie Group Ltd. both said in the past month.

The glut will force the five largest LCD makers to reduce capital spending by 24 percent to $14.7 billion in 2009, Citigroup Inc. said last month. LG Display, AU Optronics and Chi Mei cut production in the third quarter to counter an oversupply in the industry as the U.S. credit crisis and flagging consumer confidence undermine sales of consumer electronics including computers and televisions.

Global demand for LCD televisions will rise 21 percent next year to 126 million TVs, less than a previous estimate 127.5 million, Daiwa Institute of Research Ltd. said this month. Growth will probably reach 32 percent in 2008, the brokerage said.

Weaker demand and plans by LCD makers to expand capacity in 2009 may increase concern that the industry will take longer than expected to rebound, according to Merrill Lynch & Co.

``The display industry will see a couple more quarters of earnings contraction before confirming the bottom, due to financial risks in the macro market,'' Kim Hee Yeon, an analyst at Nomura Securities Ltd., wrote in a report on Oct. 2.

Source:Bloomberg