AU Optronics (NYSE:AUO) December Sales Surprisingly Weaker

With December sales for AU Optronics (NYSE:AUO) falling 17 percent, worse than even expected, it doesn't bode well for the LCD industry.

Ticonderoga said, "AU Optronics' December sales report was even weaker than the average December decline of 11.2% over the last four years for the company, which is surprising as 3Q10 was one of the worst quarters on record and sales in 4Q10 already got off to a slow start in October. By comparison, the four leading Taiwan LCD players have experienced an average sales decrease of nearly 13.5% month-over-month during December over the past four years. AUO's December sales decline follows a drop of 16.3% M/M in October and a subsequent rise of 5.0% in November. We now believe the local currency revenue Q/Q percentage decline for the Taiwan LCD players will be worse in 4Q10 (down an estimated 11-13%) versus 3Q10 (down 7%). As such, we continue to remain unexcited by our LCD coverage universe, which also includes LG Display (NYSE:LPL)(Sell) and Corning (NYSE:GLW)(Sell). Keep in mind, AUO is Corning's largest customer."

Ticonderoga maintains a "Neutral" on AU Optronics, which closed Friday at $9.96, down $0.12, or 1.19 percent.