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Samsung Electronics Q2 Profit To Fall

Discussion in 'News' started by HellasVagabond, Jul 15, 2007.

  1. HellasVagabond New Member

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    SEOUL, July 11 (Reuters) - Samsung Electronics (005930.KS: Quote, Profile, Research), the world's top memory chip maker, is set to post a 15 percent drop in quarterly profit on Friday after a steep fall in computer memory chip prices overshadowed improvements in flat screens.
    But the outlook for the second half is brighter, with prices for dynamic random access memory (DRAM) chips, used in personal computers, expected to recover on the back of seasonal demand, while the company's mobile phone and display business should improve.
    "We expect across-the-board improvements thanks to the DRAM recovery, lower marketing costs in handsets and stronger flat-panel prices," said Song Myung-sup, an analyst at CJ Securities.

    Encouraged by a strong DRAM market in 2006, manufacturers kept churning out the chips at a brisk pace in 2007 despite clear signs of oversupply and were faced with hair-raising price declines.
    DRAM prices fell by 44 percent in the April-June quarter, after dropping 24 percent in the first, Prudential Investment & Securities estimated.
    The scale of the DRAM debacle is likely to overshadow strong results in NAND-type flash memory chips used in digital cameras and music players and gains in flat screens.

    SHARES UNDERPERFORM
    Samsung, the most valuable technology company outside the United States, is expected to report a net profit of 1.29 trillion won ($1.40 billion) in the second quarter from 1.51 trillion a year ago, according to a Reuters poll of 10 analysts.
    Operating profit is forecast at 880 billion won, down 38 percent.
    "This could be the worst result posted by Samsung since the end of 2001 in terms of operating profit," said Lee Min-hee, an analyst at Dongbu Securities.
    Strength in Samsung's overseas units and an estimated 80 billion won gain from the 576 billion won initial public offering of affiliate Samsung Card are expected to ten the blow on the net profit level.
    Sales are expected at 15 trillion won, up from 14.1 trillion.
    Reflecting the poor performance, shares in Samsung, South Korea's biggest stock with a market value of about $100 billion, rose just 0.5 percent in the second quarter, trailing the broader market's (.KS11: Quote, Profile, Research) 20 percent rise.
    Analysts expect Samsung to post a net profit of 3.85 trillion won in the second half of 2007, up from an estimated 2.89 trillion in the first half of 2007, but down from 4.53 trillion in the second half of 2006, according to Reuters Estimates.
    Samsung's DRAM rivals, including Hynix Semiconductor (000660.KS: Quote, Profile, Research) and Taiwan's top DRAM makers, Powerchip Semiconductor Corp. (5346.TWO: Quote, Profile, Research), Nanya Technology Corp. (2408.TW: Quote, Profile, Research), also suffered from the price fall.
    Powerchip, a manufacturing partner of Japan's Elpida Memory Inc. (6665.T: Quote, Profile, Research), is expected to post a second-quarter net loss of T$3.57 billion ($109.1 million), when it reports later this month, against T$3.19 billion a year ago.
    Nanya is likely to post a net loss of T$2.45 billion on July 20, versus a net profit of T$3.71 billion.

    MOBILE PHONES, FLAT SCREENS
    Samsung, also the world's third-largest maker of mobile phones after Nokia (NOK1V.HE: Quote, Profile, Research) and Motorola (MOT.N: Quote, Profile, Research), is likely to show continued shipment gains from its recent push into the medium-to-low end of the market.
    Samsung is expected to have sold a record 37 million phones in April-June after selling 34.8 million in the first quarter. Margins in the telecommunications division are likely to be around 8 percent, down from 13 percent, on lower prices and higher marketing costs.
    The world's biggest maker of large liquid crystal display
    (LCD) panels is likely to have performed better in the display business, thanks to an upturn in the flat-screen market after makers reined in output.
    Operating profit margin is expected at 7 or 8 percent, compared with 3 percent a year ago.

    Source: Reuters
     
    Last edited: Jul 15, 2007
  2. jocksteeluk

    jocksteeluk New Member

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    serves them right for trying to force ram prices up by restricting the flow rather than just selling more to make up the deficit, i hope Hynix gobbled up all the contracts that Samsung refused.
     
  3. tkpenalty New Member

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    Actually I blame it on Dell trying to force OEM RAM prices DOWN.
     
  4. jocksteeluk

    jocksteeluk New Member

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    well if that is the case Dell deserves a big pat on the head.
     
  5. WarEagleAU

    WarEagleAU Bird of Prey

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    Ram shouldnt be insanely priced. making alot of ram and selling it will equal out that is all.
     

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