Tuesday, January 15, 2008

Samsung Electronics Sales Top $100 Billion

By Kim Yoo-chul
Staff Reporter
The Korea Times

Despite lingering woes in the chip industry, Samsung Electronics posted more than $100 billion in global sales last year on the back of brisk movements in liquid crystal displays and mobile handsets.

Samsung said Tuesday it made $103.4 billion or 96.1 trillion won in sales including those from overseas operations last year, for the first time ever.

At home, Samsung posted 7.42 trillion won in net profit on sales of 63.17 trillion won.

Nevertheless, the global tech giant failed to overcome the glut in the chip industry in the fourth quarter.

Samsung reported a 6.6 percent drop in fourth-quarter earnings following losses from computer memory chip sales. The company earned 2.21 trillion won ($2.36 billion) in the Oct.-Dec. period, compared with 2.36 trillion won a year earlier. Revenue jumped 11.4 percent year-on-year to 17.47 trillion won.

Operating profit fell 13.1 percent to 1.78 trillion won. The company's operating profit margin in the memory chip business, once the company's cash cow, remained at 9 percent.

"Profits at our semiconductor division are expected to decline in the first quarter," said Chu Woo-sik, executive vice president of Samsung Electronics in charge of investor relations. "We will activate our capital spending in the memory business this year."

Samsung, which produces diverse electronics goods including LCDs, mobile handsets and semiconductors, was the second to report quarterly earnings among tech companies. On Monday, LG.Philips LCD, another flat-panel maker, said its fourth-quarter earnings reached 760 billion won, a turnaround from a loss of 174 billion won.

In the past decades, DRAMs have been the main growth engine for the world's largest computer-memory chip manufacturer but ever-declining product prices sparked by an industry-wide oversupply forced global players to reduce prices.

Samsung is worried that memory prices will likely remain weak until the second quarter of this year as investment made over the past two years by manufacturers will start to translate into more products on the market.

Against this backdrop, LCDs and mobile handsets were a savior for Samsung. Samsung reported its sales of LCD panels jumped 11 percent to 4.46 trillion won from three months earlier. Its operating profit improved 37 percent to 0.92 trillion won.

Stabilizing panel prices mainly drove the strong performance. At the end of last year, the price of a 17-inch LCD panel, one of the most favorable displays for TVs and computers, stood at $134, up from $123 a year earlier, according to an industrial consulting firm DisplayBank.

Samsung sold a record 46.3 million phones in the fourth quarter. The company, which recently overtook Motorola to become the world's No. 2 handset maker, expects to sell 200 million handsets this year. ◦

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