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Shares of AUO plunge after disappointing Q2

TAIPEI--Shares of AU Optronics Corp. (AUO), one of Taiwan's leading flat panel makers, took a dive yesterday after the company reported worse-than-expected results for the second half of this year, dealers said.

As the company has incurred massive losses in the past three months, with few signs that an oversupply situation will improve any time soon, hopes have been dashed that the flat screen supplier will become profitable later this year, they said.

At the end of the session, shares of AUO closed down 4.74 percent at NT$9.05 with 119.27 million shares changing hands.

AUO's American depositary receipts fell more than 7 percent on Wall Street overnight after the company announced the second quarter results the previous day.

“The current heavy turnover of AUO shares this morning showed that many investors were rushing to dump the stock after the shock of the second quarter results,” Grand Cathay Securities analyst Jeff Chang said.

AUO said it posted NT$12.46 billion in consolidated net losses or NT$1.39 in loss per share for the second quarter of this year, extending from a net loss of NT$13.80 billion or NT$1.54 per share recorded in the first quarter.

“Before the results came out, the market had anticipated its second-quarter net loss would be narrowed to a range of NT$7 billion NT$10 billion,” Chang said. “It turned out that the situation was worse than expected.”

Chang said that as AUO's average selling price (ASP) in the past three months failed to rebound amid lingering oversupply, its bottom line remained under pressure.

According to AUO, its ASP for the second quarter fell to US$643 per square meter of panel from NT$649 recorded in the first quarter.

In addition, AUO spent massive efforts in research and development of new products and technology processes, which still suffered a low yield rate and commanded higher costs, Chang said, referring to products, including active-matrix organic light-emitting diode (AMOLED) panels.

Although AUO's gross margin for the second quarter improved by 4.7 percentage points from the first quarter to minus 3.3 percent, Chang said, the improvement was insignificant.

“The market had previously expected that AUO would turn a profit in the fourth quarter, but as oversupply is expected to continue to affect the flat panel sector, it is unlikely the company will make money by the end of this year,” Chang said.

Chang said he has revised his forecast of AUO's loss per share for 2012 to NT$3.61 from NT$2.02 after the second-quarter results.

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