Easy domain and Hosting

Permanent short link for Go Daddy.com Just ez2.me
Spring Savings! $7.99 .com
Next time for Go Daddy: Easy to you just www.ez2.me Dadicated link for Go Daddy.com Just ez2.me

Friday, July 29, 2011

Samsung second quarter profit slides 18 percent

South Korean technology conglomerate joins a host of global companies in warning that fragile consumer demand is hurting sales of TVs, flat screens, computers and semiconductors.

"Samsung's earnings momentum will revive in Q3, but the recovery will not be strong because of weak economies in the U.S. and Europe," said Lee Dong-Jin, fund manager at KTB Asset Management." There are also no new IT applications that can drive demand as Apple's iPhone and iPad did."

Samsung, which reported operating profit fell 25-percent from a record, warned of a challenging business outlook. Falling chip prices are the biggest concern for the South Korean company as it earned half of its profit from semiconductors in the second quarter.

On Thursday, Sony Corp and Panasonic Corp also warned of weak TV sales, especially in the United States and Europe, following Philips (PHG.AS) and Corning Inc in highlighting anemic demand.

Samsung is however betting big on its mobile phone business as it rolls out new versions of tablets and phones, helping it capture market share from Research in Motion (RIM.TO) and Nokia .

Samsung's shares, which hit a record high in late January, have lost 12 percent so far this year, while the broader KOSPI has gained 5 percent.

The company boasts a market capitalisation of $134 billion, bigger than the combined value of Sony, Nokia , Toshiba Corp , Panasonic and LG Display .

Samsung has suffered this year due to slack prices for electronic components amid oversupply and weak demand. Net profit slumped 30 percent in the first quarter amid declines in memory chip prices and reduced profitability in LCDs and TVs.
Second quarter sales at the Suwon, South Korea-based company rose 4.1 percent to 39.4 trillion won from 37.9 trillion won a year earlier.
"We were confronted with a difficult business environment overall," Robert Yi, a Samsung vice president, said on an earnings conference call. Global economic uncertainties persisted, and consumer demand for products such as personal computers and televisions was "soft."
Yi said Samsung's revenue gain was "mainly due to strong handset performance led by continuing success of our smartphones."
Both operating profit and sales in Samsung's memory business fell as weak global personal computer sales suppressed demand for DRAM, or dynamic random access memory, chips used in the devices, the company said in a release.
Samsung's display panel business racked up an operating loss of 210 billion won, reversal from profit of 880 billion won the year before, with sales declining 9 percent as LCD prices fell.
Yi called the results in that sector "quite disappointing."
The bright spot continued to be mobile phones. Revenues in the company's mobile communications business, which includes phones, rose 45 percent from the year before. Sales of mobile phones increased from the previous quarter on the back of the company's flagship Galaxy S II smartphone.
Samsung, which ranks No. 2 in mobile phones behind Finland's Nokia Corp., has sold more than 5 million units globally of the updated smartphone since it went on sale in late April.
Samsung expects demand for mobile phones to increase 15 percent in the second half of this year driven by consumers upgrading to smartphones, it said in the release.
Shares in Samsung, which announced results before South Korea's stock market opened, rose 0.8 percent to close Friday at 844,000 won. The company's stock price has declined 11 percent so far this year.

No comments:

Post a Comment