LG Display has increased fears of rapid supply growth of LCD panels by announcing it is considering constructing a new LCD production line to meet demands. Manufacturers of LCD television products have been enjoying a healthy level of demand for LCD flat-screens, bolstered recently by Chinese holidays and sporting events like the Winter Olympics.
However, concerns are taking root in the industry that it may return to a state of oversupply as manufacturers beef up production to capitalize on the demand. Controlling supply is important for players in the industry to maintain profit margins for the technology.
“Although demand is strong, growing capacity will become increasingly burdensome for the industry,” said Jason Kang, an analyst at NH Investment & Securities. “Supply is already growing and the growth will be faster next year.”
LG plans to begin operation of a separate production line in the first half of 2010, while Taiwanese rivals are increasing factory utilization. “We are considering increasing capacity because we have been unable to meet all client demand for some time,” said an LG Display spokesman. “But nothing has been decided yet.”
LG Display CFO James Jeong revealed to investors just last month that the company was meeting under 90 percent of orders received and that the situation was likely to continue for months.
Result for: profit margins
Netflix has reported its highest number of new customers in a single quarter in the company’s history, adding more than 1.1 million new subscribers in the fourth-quarter. It took four years to hit 1 million subscribers after Netflix launched in 1999. Investors applauded as the company revealed its results for the quarter, including a 36 percent rise in the Q4 profits for the rental-by-mail service.
Netflix now has more than 12 million subscribers, with a boost in new subscribers in response to new plans that bundle the rental-by-mail service with unlimited video streaming over the Internet, for prices as low as $9 per month. The good news didn’t stop there for investors either; Netflix management expects Q1 2010 to be even more successful, projecting between 1.2 and 1.5 million new subscribers by the end of March.
Fourth-quarter revenue climbed 24 percent to $444.5 million, missing analyst expectations by $1 million. The shortfall however was overshadowed by pledges from management to boost profit margins to 11 percent from its previous 10 percent target.
Netflix got a big boost in the fourth quarter when services available through the PlayStation 3 (PS3), while already being available through Xbox 360 and it is reportedly heading for the Wii console.
Result for: profit margins
Redbox, a DVD rental Kiosk service that operates 17,900 kiosks in the U.S., has filed a lawsuit against 20th Century Fox for attempting to delay new releases from its machines. Fox, like Universal before it, believe that Redbox’ $1 rental fee and $7 DVD sales seriously undervalue the product, and will do damage to DVD sales by diverting consumers away from stores like Blockbuster where they are surrounded by new DVDs to buy.
The lawsuit was filed on Tuesday in U.S. District Court in Wilmington, Delaware. Redbox had previously sued Universal for the same tactics and is awaiting a decision. The Fox lawsuit accuses the studio of violating antitrust laws by reducing consumer choice in the marketplace, as well as increasing prices that consumers must pay.
Not all studios feel the same way as Fox and Universal however. Sony Pictures reached a deal with Redbox to offer Sony titles for rental, as long as Redbox destroyed the rental DVDs instead of selling them when their rental life is over. Lions Gate Entertainment Group also agreed on Tuesday to make its films available to Redbox immediately.
Universal and Fox are attempting to delay new releases from reaching the kiosks, anticipating that DVD sales will be lost, by pressuring distributors to wait a number of weeks before selling to Redbox. However, Redbox customers won’t have noticed a difference most likely, because the company paid a premium cost and bought new DVDs from retailers instead, hitting the company’s profit margins but maintaining supply.
