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Sat, Jan 14, 2006 - Page 12 News List

Samsung announces profit surge


Samsung Electronics Co said yesterday its fourth quarter net profit surged a stunning 40 percent, thanks to strong demand for flat panel TVs and semiconductors.

South Korea's biggest company and the world's largest memory chip maker said it earned 2.56 trillion won (US$2.6 billion) in the quarter through last month, up from 1.83 trillion won in the same period a year ago.

Sales rose 12 percent to 15.52 trillion won.

Samsung is clearly benefiting from robust demand for sleek flat panel TVs as consumers replace their bulky cathode-ray tube TVs.

The company makes its own flat panel TVs and is a major supplier of the liquid crystal displays, or LCDs, used in other manufacturers' television sets, as well as in laptops and cellphones.

The strong earnings results were largely due to growth in the TV segment, particularly large televisions and semiconductors, Woosik Chu, senior vice president for investor relations, told analysts on a conference call.

"The demand for DRAM and NAND was very strong in Q4, especially for NAND we have seen a significant improvement in the profit margin," he said.

DRAM, or dynamic random access memory chips, are used in personal computers, while NAND, so-called flash memory chips, are widely used in digital cameras and MP3 players, such as Apple Computer Inc's hot-selling iPod Nano.

Samsung seems to have invested in all the hot products. It is also a leading maker of mobile phone handsets and digital music players.

"They seem to have everything in the pipeline and they make profits" on those products, said Jay Kim, an analyst at Hyundai Securities in Seoul. "They have been benefiting from their integrated business structure."

One of the secrets of Samsung's emergence as a top technology company has been its emphasis on research and development even during tough times, such as the 2001 collapse in semiconductor prices and other downturns.

Samsung, known decades ago as a manufacturer of cheap televisions and other goods, in September announced a seven-year, US$33 billion capital investment plan that it expects to create 14,000 new jobs in South Korea.

The earnings results were much better than expected. The average forecast of 12 analysts surveyed by Dow Jones Newswires was for an increase in net profit of 18 percent or 2.16 trillion won (US$2.2 billion).

For all of last year, however, net profit slid 29 percent from the year before to 7.64 trillion won, the company said. Sales for the year slipped 0.3 percent to 57.46 trillion won.

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