Sat, Jul 30, 2011 - Page 10 News List

Samsung second-quarter net income plunged 18 percent

AP, SEOUL

Samsung’s net profit slid 18 percent in the second quarter as weakness in semiconductors and LCDs countered the electronics giant’s growing strength in smartphones.

Samsung, the world’s biggest manufacturer of memory chips, LCDs and flat-screen televisions, earned 3.51 trillion won (US$3.33 billion) in the three months ended June 30, it said yesterday in a regulatory filing.

Samsung earned 4.28 trillion won in the same period last year.

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,” Samsun vice president Robert Yi said on an earnings conference call.

Global economic uncertainties persisted and consumer demand for products such as personal computers and televisions was “soft,” he said.

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 for its memory business fell as weak global PC sales affected demand for DRAM chips, the company said in a press release.

Samsung’s display panel business racked up an operating loss of 210 billion won, a reversal from a 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 from its 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 yesterday at 844,000 won. The company’s stock price has declined 11 percent so far this year.

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