Flat panel maker AU Optronics Corp. said Wednesday that it witnessed a sharp decline in net profit for the third quarter from the previous quarter due to lower-than-expected product prices and high inventories. In the July-September period, AUO posted NT$227 million (US$7.4 million) in net profit, down 98 percent from NT$11.25 billion recorded a quarter earlier. AUO's operating profit in the third quarter reached NT$232 million, a drop of 98.2 percent from NT$13.22 billion posted in the second quarter, while sales during the same period were down 3.3 percent at NT$124.40 billion. The company's earnings per share in the third quarter fell to NT$0.01 from NT$1.24 generated in the second quarter. The third quarter's gross margin stood at 5 percent, also down from 15.8 percent recorded in the second quarter, while its operating margin fell to 0.2 percent from 10.3 percent. The company said shipments of large panels, which refers to those of 10 inches or above, totaled 28.7 million units in the third quarter, down 3.2 percent from the second quarter, while shipments of small and medium-sized panels rose 0.3 percent to 55.6 million units. Panels used in TVs accounted for 56 percent of the total sales, making the largest portion of its products sold during the period, up from the 51 percent recorded in the second quarter, the company said. AUO said it had adjusted capacity utilization rates to improve the number of inventory turnover days from 43 days at the end of the second quarter to 40 days at the end of the third quarter and would continue to do so, along with boosting the volume of value-added products and enhancing research and development. TLG Asset Management analyst Arch Shih said the third quarter's earnings data confirmed the market's concerns over the gloomy outlook for the global flat panel business in the third quarter, but said the numbers for AUO were better than expected. 