LG Elec posts Q4 operating loss on screens

SEOUL, Jan 23 (Reuters) LG Electronics Inc. on Tuesday reported a surprise fourth-quarter operating loss and an 85 percent slump in net profit for the period, hit by dismal results in its flat-screen operations.

Analysts are bearish about the current quarter, as weak seasonal demand will further hurt the display unit.

An all-out battle between liquid crystal display (LCD) and plasma display (PDP) panels for the flat screen television and computer screen markets has tilted to the LCD makers' advantage, with PDP firms like LG forced to drastically lower prices and even cut output.

LG continued to feel the negative impact of another poor quarter at LG.Philips LCD , its LCD joint venture, which last week posted a third consecutive net loss amid heated competition and plummeting prices.

LG, which competes with local rival Samsung Electronics Co. Ltd.

, posted a 43.4 billion won (.13 million) operating loss in the quarter to Dec. 31, compared with a 211.1 billion profit a year earlier. Analysts had been expecting an operating profit of around 100 billion won.

LG posted a 48.2 billion won (.23 million) net profit in the quarter ended Dec. 31, helped by non-operating items including contributions from overseas affiliates. The result was still down sharply from a 312.2 billion won profit a year ago, although above expectations of a 22.6 billion billion profit.

Shares in LG, which has a market value of about billion, fell 1.5 percent at 0531 GMT, trailing the broader market's <.ks11> 0.47 percent fall. LG lost 9.84 percent in the fourth quarter, compared with the wider market's 4.6 percent rise.

Sales were 5.52 trillion won versus 6.18 trillion a year ago.

LG, the world's fifth-biggest mobile phone maker after Nokia , Motorola Inc. , Samsung and Sony-Ericsson, sold 17 million handsets, up from 16.5 million in the third quarter.

Prospects beyond the first quarter are positive, with LG expected to earn a net profit of 651.5 billion won for all of 2007, up sharply from 211.9 billion won for 2006.

Profit will be fuelled by strong handset sales thanks to the ongoing success of recent models such as the thin ''Chocolate'' and metal-body ''Shine,'' as well as a broadening customer base, analysts said.

REUTERS CS GC1208