Major producer of liquid crystal display (LCD) panels and flat-panel TVs, with advanced technology Substantial decline in profitability in its LCD business because of a delayed response to changes in a rapidly maturing market; a quick and meaningful recovery in business performance is unlikely Large exposure to volatile LCD business and modest profits in non-LCD business Weaker-than-industry-average and highly volatile profitability High earnings volatility in LCD business, which we believe the company is likely to mitigate somewhat using Hon Hai Precision Industry Co. Ltd.'s (A-/Stable/--) customer base and supply chain Weak cash flow generation Heavy debt burden Expected negative free operating cash flow (FOCF) over the next one to two years because of weak operating cash flow and increasing capital
