Samsung - Samsung Elec profit tops forecasts
Samsung Elec profit tops forecasts
Friday January 13, 5:28 am ET By Kim Yeon-hee and Rhee So-eui
SEOUL (Reuters) - Samsung Electronics Co. Ltd. (KSE:005930.KS - News) posted a better-than-expected 40 percent jump in quarterly net profit on Friday, marking its first growth in five quarters, on soaring demand for flat screens and chips used in mobile phones and MP3 players.
The world's top memory chip maker forecast solid business momentum heading into 2006, particularly for mobile phones, but the outlook for its bread-and-butter dynamic random access memory (DRAM) chips and flat screens was laced with caution.
The world's most valuable technology firm outside the United States and a benchmark for the sector forecast liquid crystal display (LCD) panel prices would fall 10-15 percent in 2006 from 2005, although a rebound in demand was seen in the second half.
Shares in Samsung, which saw its market value top $100 billion for the first time this month, reversed its losses to end up 1.5 percent as investors warmed up to Samsung's overall guidance.
"We should see better profit from Samsung in upcoming Q1 earnings because demand for chips is rising with the upbeat outlook in the global IT industry," said Chang In-whan, chief executive and fund manager at KTB Asset Management.
"But we won't see the rise in profits (from flat screens) as the flat screen sector is still over-supplied."
Samsung earned 2.56 trillion won ($2.63 billion) in net profit for the quarter ended December, topping analysts' forecast of 2.18 trillion. It was the first increase in its quarterly profits since the third quarter of 2004.
The result compared with 1.83 trillion won a year ago and the previous quarter's 1.88 trillion won.
However, operating profit was 2.14 trillion won in the fourth quarter, below a consensus analyst forecast of 2.32 trillion won, due to the introduction of an incentives-based compensation after a move to abolish stock options.
Samsung's net profit is likely to jump about a quarter to 9.66 trillion won this year from 7.64 trillion won in 2005, Reuters Estimates showed. But that would still fall short of the record 10.79 trillion won reached in 2004.
Worries over a stronger won (KRW=KFTC), which hit an eight-year high against the dollar on Thursday, may dent the firm's prospects, as it derives more than two-thirds of its profits from exports.
Samsung is targeting an 11 percent rise in sales to 63.6 trillion won in 2006, lower than a consensus forecast of 65.7 trillion.
Shares in Samsung, closed up 1.46 percent at 694,000 won, beating the wider market (KSE:^KS11 - News) up 0.98 percent. The shares rose 12 percent in the fourth quarter, compared with the wider market's 13 percent gain.
SLIM PHONES
The firm plans a share buyback worth about 2 trillion won this year, Chu said, almost unchanged on 2005.
Samsung, the world's third-biggest cell phone maker, forecast global demand in the mobile phone market would grow up to 10 percent in 2006 from last year.
Helped by the introduction of slim mobile phone models last year following the success of Motorola's titanium-silver Razr phones, Samsung said it aimed to sell 115 million handsets this year versus 102 million in 2005.
The firm expects prices of its mobile phones to rise slightly in the first quarter from the fourth, but said the sales forecast may change depending how the low-end handset market performs.
The company, which trails Nokia (NOK1V.HE) and Motorola Inc. (NYSE:MOT - News) in the mobile phone market, sold a record 27.2 million mobile phones in the fourth quarter, up from 26.8 million in the third quarter and 21.1 million phones a year ago.
But margins in the cell phone division fell to 8 percent against 12 percent in the third quarter due to year-end inventory clearance and heavy marketing costs.
CHIPS, LCD
In the memory chip sector, where it competes with local rival Hynix Semiconductor Inc. (KSE:000660.KS - News) and Micron Technology (NYSE:MU - News) of the United States, it forecast DRAM chips would see similar market conditions this year versus 2005 due to slowing PC sales.
Average contract prices of the mainstay 256-megabit DDR (double data rate) DRAM chips, used mainly in computers, slid more than 40 percent by the end of December from a year ago. On a quarterly basis, prices were down 6 percent in October-December.
Meanwhile, it said demand for NAND flash chips, used in the hot-selling iPod music player of Apple Computer Inc. (NasdaqNM:AAPL - News) and other hand-held game players, should triple this year from 2005.
The average selling price of NAND chips, increasingly also replacing hard discs in electronic goods such as car navigation gadgets, dropped 17 percent in the fourth quarter, within its forecast of a drop of up to 20 percent.
Samsung is battling Japanese rival Toshiba Corp. (Tokyo:6502.T - News) in the NAND flash chip market with more than half market share.
It supplies its NAND chips to Microsoft's (NasdaqNM:MSFT - News) Xbox consoles and has been in talks with Sony Corp. (Tokyo:6758.T - News) to equip the Japanese firm's PlayStation Portable (PSP) and other game machines with Samsung's flash chips.
In the LCD division, Samsung's margins on overall LCD panels rose 2 percentage points to 13 percent from the third quarter, although prices for 40-inch TV panels fell 5 percent and those for 19-inch monitors posted an 11 percent fall in the fourth quarter from the preceding quarter.
Samsung expects LCD panel demand to soften in the first half, but rebound strongly in the second half.
"We have some concerns about monitors because prices are going down quickly, but TV panel demand looks good," said Kim Tae-hong, a senior fund manager at Mirae Asset Investment Management.
LCD makers, including LG.Philips LCD Co. Ltd. (KSE:034220.KS - News; NYSE:LPL - News) and Taiwan's AU Optronics Corp. (Taiwan:2409.TW - News; NYSE:AUO - News), are ramping up output, raising fears about a supply glut.
LG.Philips LCD, which is battling Samsung for the title of the world's top LCD maker, reported on Thursday its quarterly profit jumped more than nine-fold, beating market expectations, but its shares slumped after it gave a disappointing outlook.
Samsung has earmarked 9.23 trillion won for capital investment this year, down slightly from 10.04 trillion in 2005.
It left the final dividend unchanged at 5,000 won per share.
($1=973.8 Won)
Friday January 13, 5:28 am ET By Kim Yeon-hee and Rhee So-eui
SEOUL (Reuters) - Samsung Electronics Co. Ltd. (KSE:005930.KS - News) posted a better-than-expected 40 percent jump in quarterly net profit on Friday, marking its first growth in five quarters, on soaring demand for flat screens and chips used in mobile phones and MP3 players.
The world's top memory chip maker forecast solid business momentum heading into 2006, particularly for mobile phones, but the outlook for its bread-and-butter dynamic random access memory (DRAM) chips and flat screens was laced with caution.
The world's most valuable technology firm outside the United States and a benchmark for the sector forecast liquid crystal display (LCD) panel prices would fall 10-15 percent in 2006 from 2005, although a rebound in demand was seen in the second half.
Shares in Samsung, which saw its market value top $100 billion for the first time this month, reversed its losses to end up 1.5 percent as investors warmed up to Samsung's overall guidance.
"We should see better profit from Samsung in upcoming Q1 earnings because demand for chips is rising with the upbeat outlook in the global IT industry," said Chang In-whan, chief executive and fund manager at KTB Asset Management.
"But we won't see the rise in profits (from flat screens) as the flat screen sector is still over-supplied."
Samsung earned 2.56 trillion won ($2.63 billion) in net profit for the quarter ended December, topping analysts' forecast of 2.18 trillion. It was the first increase in its quarterly profits since the third quarter of 2004.
The result compared with 1.83 trillion won a year ago and the previous quarter's 1.88 trillion won.
However, operating profit was 2.14 trillion won in the fourth quarter, below a consensus analyst forecast of 2.32 trillion won, due to the introduction of an incentives-based compensation after a move to abolish stock options.
Samsung's net profit is likely to jump about a quarter to 9.66 trillion won this year from 7.64 trillion won in 2005, Reuters Estimates showed. But that would still fall short of the record 10.79 trillion won reached in 2004.
Worries over a stronger won (KRW=KFTC), which hit an eight-year high against the dollar on Thursday, may dent the firm's prospects, as it derives more than two-thirds of its profits from exports.
Samsung is targeting an 11 percent rise in sales to 63.6 trillion won in 2006, lower than a consensus forecast of 65.7 trillion.
Shares in Samsung, closed up 1.46 percent at 694,000 won, beating the wider market (KSE:^KS11 - News) up 0.98 percent. The shares rose 12 percent in the fourth quarter, compared with the wider market's 13 percent gain.
SLIM PHONES
The firm plans a share buyback worth about 2 trillion won this year, Chu said, almost unchanged on 2005.
Samsung, the world's third-biggest cell phone maker, forecast global demand in the mobile phone market would grow up to 10 percent in 2006 from last year.
Helped by the introduction of slim mobile phone models last year following the success of Motorola's titanium-silver Razr phones, Samsung said it aimed to sell 115 million handsets this year versus 102 million in 2005.
The firm expects prices of its mobile phones to rise slightly in the first quarter from the fourth, but said the sales forecast may change depending how the low-end handset market performs.
The company, which trails Nokia (NOK1V.HE) and Motorola Inc. (NYSE:MOT - News) in the mobile phone market, sold a record 27.2 million mobile phones in the fourth quarter, up from 26.8 million in the third quarter and 21.1 million phones a year ago.
But margins in the cell phone division fell to 8 percent against 12 percent in the third quarter due to year-end inventory clearance and heavy marketing costs.
CHIPS, LCD
In the memory chip sector, where it competes with local rival Hynix Semiconductor Inc. (KSE:000660.KS - News) and Micron Technology (NYSE:MU - News) of the United States, it forecast DRAM chips would see similar market conditions this year versus 2005 due to slowing PC sales.
Average contract prices of the mainstay 256-megabit DDR (double data rate) DRAM chips, used mainly in computers, slid more than 40 percent by the end of December from a year ago. On a quarterly basis, prices were down 6 percent in October-December.
Meanwhile, it said demand for NAND flash chips, used in the hot-selling iPod music player of Apple Computer Inc. (NasdaqNM:AAPL - News) and other hand-held game players, should triple this year from 2005.
The average selling price of NAND chips, increasingly also replacing hard discs in electronic goods such as car navigation gadgets, dropped 17 percent in the fourth quarter, within its forecast of a drop of up to 20 percent.
Samsung is battling Japanese rival Toshiba Corp. (Tokyo:6502.T - News) in the NAND flash chip market with more than half market share.
It supplies its NAND chips to Microsoft's (NasdaqNM:MSFT - News) Xbox consoles and has been in talks with Sony Corp. (Tokyo:6758.T - News) to equip the Japanese firm's PlayStation Portable (PSP) and other game machines with Samsung's flash chips.
In the LCD division, Samsung's margins on overall LCD panels rose 2 percentage points to 13 percent from the third quarter, although prices for 40-inch TV panels fell 5 percent and those for 19-inch monitors posted an 11 percent fall in the fourth quarter from the preceding quarter.
Samsung expects LCD panel demand to soften in the first half, but rebound strongly in the second half.
"We have some concerns about monitors because prices are going down quickly, but TV panel demand looks good," said Kim Tae-hong, a senior fund manager at Mirae Asset Investment Management.
LCD makers, including LG.Philips LCD Co. Ltd. (KSE:034220.KS - News; NYSE:LPL - News) and Taiwan's AU Optronics Corp. (Taiwan:2409.TW - News; NYSE:AUO - News), are ramping up output, raising fears about a supply glut.
LG.Philips LCD, which is battling Samsung for the title of the world's top LCD maker, reported on Thursday its quarterly profit jumped more than nine-fold, beating market expectations, but its shares slumped after it gave a disappointing outlook.
Samsung has earmarked 9.23 trillion won for capital investment this year, down slightly from 10.04 trillion in 2005.
It left the final dividend unchanged at 5,000 won per share.
($1=973.8 Won)
posted at 7:32 a.m.
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