Are LCD Manufacturers the World’s Worst Colluders?

From William Trent, CFA of Stock Market Beat

Apparently we weren’t the only ones who noticed that LCD makers were teaming up as a way to ease the competitive intensity. LG.Philips says investigated by S.Korea, Japan, U.S.: Financial News – Yahoo! Finance

South Korean flat screen maker LG.Philips LCD Co. Ltd. (LPL) on Monday said it was being investigated by fair trade watchdogs from Korea and Japan and had received a subpoena from the U.S. Department of Justice. The company, a joint venture between LG Electronics Inc. and Philips Electronics, said it would cooperate fully with authorities.”Last Friday, as part of an investigation of possible anticompetitive conduct in the LCD industry, officials from the Korean Fair Trade Commission (KFTC) visited the offices of LG.Philips LCD in Seoul, Korea,” LG.Philips said in statement.

The real joke here, of course, is that the cartel laws are typically designed to protect consumers from companies controlling the market to raise prices. As we have noted many times, exactly the opposite is happening in the LCD space. The article notes this as well:

The company is struggling with weak prices and high costs for its mainstay TV panels. Analysts point to its lack of a diversified client base as one of the reasons behind its weak pricing power.

So all we can say is, if the LCD manufacturers are colluding, they are really bad at it.

The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: FedEx (FDX) put options; Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion’s Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Ceradyne (CRDN) put options; Lion’s Gate (LGF) call options; Dell (DELL) put options; Plantronics (PLT) put options;

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