Philips & LG are set to sell as much as US$3 billion dollars worth of share in the worlds largest LCD manufacturing operation. The move comes as Philips struggles in the Lifestyle Technology market.

Struggling electronics group Philips and Korean powerhouse LG Electronics are close to selling as much as $3 billion of their stock in the LG Philips LCD Company which is the world’s largest maker of liquid-crystal display. Shares in the company surged after the news was leaked. In Australia Philips is struggling to gain market share in the lifestyle technology market and during the past 12 months the company has slashed advertising and marketing activities while trying to hang on to retail distribution relationships.

Analysts are tipping that LG Electronics may sell a stake of about 10 percent when a restriction on sales ends in July, Park Hyeong an investor relations manager said today. The Seoul-based Company and Amsterdam-based Philips scrapped plans to sell shares in a $1 billion LG.Philips initial public offering last July. They each hold a 44.5 percent stake and agreed to keep equal ownership. “It’s become easier for them to sell their stakes in the joint venture as the prospects for the LCD market are improving,” said Chung Jae Yeol, an analyst at Good Morning Shinhan Securities Co. in Seoul. “Each company wants to sell the 10 percent stake they couldn’t sell at last year’s IPO.”

LG.Philips shares surged 39 percent in the past year as market researcher DisplaySearch said shipments of LCDs used in flat-panel computer monitors and televisions rose at a faster- than-expected pace to a record in the first quarter. LG Electronics plans to increase spending by 40 percent to $3.5 billion this year, while Philips is selling stakes in companies including Vivendi Universal SA to fund acquisitions.

Philips Chief Executive Gerard Kleisterlee, 58, sold stakes in Vivendi and ASML Holding recently NV as it prepares for acquisitions in medical systems and health-care appliances, industries typically less sensitive to economic swings than the semiconductor and electronics businesses.

Shares of Philips, Europe’s biggest maker of televisions and coffee machines, had their biggest decline in two years on June 15 after it said demand in Europe for its consumer electronics is slowing this quarter. In the US market the company has failed to make a profit in the consumer technology market for more than 15 years.

LG.Philips shares today fell as much as 3.4 percent. Lee Bang Su, LG Philips spokesman, declined to comment on the plans of shareholders. He said each of the two firms will hold at least a 30 percent stake for at least three years.

LG Electronics, South Korea’s second-largest electronics maker after Samsung, said in January it plans to spend 1.7 trillion won (1.7 billion) this year expanding plants and other facilities and 1.8 trillion won on research and development.

Chief executive Kim Ssang Su, 60, is building plants from Poland to India as the company seeks to increase handset sales by as much as 50 percent in 2005. The Seoul-based company had an 86 percent decline in first- quarter net income after the LCD venture posted a loss and a stronger won eroded the value of its exports. In Australia LG is slashing the cost of its products

LG.Philips said in April an oversupply of LCDs that caused the company’s first loss in two years will ease this quarter and demand will meet supply in the next three months.

Expansion by Chief Executive Koo Bon Joon, 53, and his rivals in the $35 billion LCD industry had led to an oversupply which drove first-quarter prices down 41 percent from a year earlier. The company had a first-quarter loss of 79 billion won, compared with profit of 628 billion won a year earlier.

Hewlett-Packard Co., the world’s second-largest maker of personal computers, in June agreed to purchase $5 billion of flat- panel screens for notebook and desktop computers, becoming LG.Philips LCD’s biggest customer.

The U.S. Company’s commitment is the latest sign that demand for personal computers may be recovering. LG.Philips, which overtook Samsung Electronics in the latest quarter as the world’s top maker of LCDs, is spending $4.6 billion on its factories this year.

First-quarter shipments of LCDs measuring at least 10 inches diagonally at LG.Philips rose 13 percent from the fourth quarter to 9.5 million units, DisplaySearch said May 27.

Industry shipments rose 34 percent from a year earlier to 42.9 million units after a 34 percent decline in prices spurred demand, DisplaySearch said. Industry sales fell 12 percent from a year ago to $8.1 billion, it said.