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Electronic News via NewsEdge Corporation :

Despite the difficult business climate caused by rising global oil prices, solid sales of semiconductors, LCDs, and mobile phones were key factors that helped Seoul, Korea-based Samsung Electronics Co. Ltd. announced Q3 sales of $13.9 billion (14.54 trillion Korean won), up 7 percent sequentially from Q2, and up 1.4 percent from Q3 2004.

Q3 operating income was $2 billion (2.13 trillion won), 28.8 percent sequentially higher than Q2, while net income was $1.8 billion (1.88 trillion won).

Net profit in Q3 increased 11 percent from Q2, while operating profit rose 29 percent sequentially in Q3 quarter on the back of increased sales of NAND Flash chips, strong demand of LCDs, and increased sales of mobile phones in Europe and North America, Samsung said.

The company noted that growth rate of net profit in Q3 was less than that of operating profit due to provisions set aside to cover costs related to the U.S. government investigation into the price-fixing http://www.reed-electronics.com/electronicnews/article/CA6271615 of memory chips. Due to the provisions, equity-related gains decreased in Q3.

Sales for Samsung’s semiconductor business increased to 10.2 percent sequentially to $4.4 billion (4.59 trillion won) from $4 billion (4.17 trillion won) in Q2, but dropped 3.2 percent from $4.5 billion (4.74 trillion won) in Q3 2004, driven by demand for NAND Flash chips used in MP3 players and mobile phones remaining robust. Migration to the finer process technology in both DRAM and NAND Flash helped reduce manufacturing costs and boost profitability, the company said.

Within the semiconductor business, revenue from system LSIs fell 11.4 percent to $526.7 million (550 billion won) from $603.3 million (630 billion won) in Q3 2004, but increased 22.8 percent sequentially from $430.8 million (450 billion won) in Q2.

Memory sales in Q3 totaled $3.3 billion (3.47 trillion won), 7.7 percent sequentially higher than Q2, but 4.6 percent lower than the same quarter last year.

The telecommunication network business posted sales of $4.4 billion (4.58 trillion won), and operating income of $526.7 million (550 billion won) as Samsung sold a record 26.8 million phones in Q3. The company indicated that globally, the handset market is increasingly becoming more competitive as companies produce more mid-to-low-end handsets but Samsung continues to be a market leader in the high-end, premium handset sector.

Demand for Blue-Black phones, launched in November 2004, remained robust in Q3, Samsung said. The company expects stronger average selling prices in Q4 with the launch of new premium products such as the D600 and 3G phones.

Samsung’s LCD business reported revenue and operating income of $2.6 billion (2.68 trillion won) and $287.2 million (300 billion won), respectively. The company expects its performance to improve in Q4 as demand for LCDs increases, especially the sales of 32-inch and larger LCD TV panels,

Digital media business sales decreased to $1.6 billion (1.64 trillion won) and posted a $19.2 million (20 billion won) operating loss. Sales in its digital appliance business dropped 15 percent to $814.3 million (850 billion won) and operating income at $38.3 million (40 billion won).

“Despite the challenging business environment and depressed market conditions, sales of our mainstay products remained robust, demonstrating the inherent strength and competitiveness of Samsung’s business model,” said Dr. Woosik Chu, senior VP of Samsung’s investor-relations team, in a statement.

“Samsung Electronics anticipates positive fourth-quarter results as demand for IT products tend to surge in the year end,” he concluded.

<<Electronic News — 10/31/05>>