Flat-screen maker LG.Philips LCD. Co. Ltd. is expected to report a loss for the second quarter in a row, as it struggles with weak prices and high costs for its mainstay TV panels.

LG.Philips, the world's biggest maker of large-sized liquid crystal display (LCD) panels in 2005, is likely to continue to bleed red ink until early 2007, despite its efforts to cut spending and boost output of higher-margin monitor panels.

The South Korea-based company has been feeling the brunt of heavy depreciation costs and inventories, while home rival Samsung Electronics Co. Ltd. and Taiwan's AU Optronics Corp. enjoy growing demand for LCD panels for televisions and monitors.

LG.Philips has a structural problem and it will take some time to fix it, said Michael Min, an analyst at Korea Investment & Securities. The company is failing to control costs and has a relatively weak client base.

Analysts estimate about a 10 percent fall in LG.Philips average panel prices in the third quarter, after an 18 percent slide in the second quarter.

LG.Philips, a joint venture between South Korea's LG Electronics Inc. and Dutch company Philips NV , is expected to report on Tuesday a net loss of 318.2 billion won ($335.8 million) for the quarter ended in September, according to 10 analysts surveyed by Reuters.

This compares with a 47.5 billion won profit a year earlier and a record 321.5 billion loss posted in the second quarter.

Inventory write-down as well as hefty depreciation costs likely further bruised the company's earnings last quarter, analysts said.

Sales are expected at 2.46 trillion won, compared with 2.42 trillion won a year ago and 2.09 trillion in the second quarter.

Investors will also tune in to find out any details on an expected sale of Philips's 32.9 percent stake in the LCD joint venture.

Japan's Sharp Corp. and Matsushita Electronics Industrial Co. , maker of the Panasonic brand, have been tipped by analysts and industry watchers as potential buyers of the stake.

NO RELIEF IN SIGHT

After a sharp fall early this year, LCD prices have stabilized in recent months, with prices of larger monitor screens rebounding.

We are likely to see a slight improvement in the fourth quarter, but still a loss. And it will be followed by a seasonally weak first quarter, so any gain can only be temporary, said Jae H Lee, an analyst at Daiwa Securities.

Research house iSuppli predicts faster shipment growth for large LCD screens in the second half, after slower-than-expected flat-screen TV sales disappointed makers earlier this year.

TV panels accounted for 48 percent of sales at LG.Philips in the second quarter.

However, many agree that the current upturn in panel prices cannot be sustained and that the industry will remain saddled with lingering oversupply in the aftermath of the LCD makers' recent capacity race.

I think a turnaround will come only in the third quarter next year or so, said Jason Kang, a Daewoo Securities analyst.

Shares in LG.Philips, which has a market value of $12 billion, dropped 11 percent in the third quarter against a 5.9 percent gain in the wider market .

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