Samsung suffers first quarterly loss, outlook gloomier

SEOUL, Jan. 23 (Yonhap) -- Samsung Electronics Co. reported Friday its first-ever quarterly loss in the final quarter of 2008 as the deepening global economic recession battered demand for chips, mobile phones and other electronic devices.

The earnings outlook for the world's largest maker of computer memory chips and
major consumer electronics supplier looks even gloomier as Samsung predicts
demand will remain sluggish through the year.
"With uncertainty about the global economy expected to persist in 2009, consumer
demand for electronics goods is expected to remain stagnant," Samsung said in a
statement.
In a press conference, Robert Yi, head of Samsung's investor relations team said
it will be difficult for the company to report a net profit in the first-quarter
of this year, citing traditionally weaker demand for new electronics goods during
the period.
"Given the current market conditions, a turnaround in the first quarter would be
difficult," Yi told reporters.
During the October-December period last year, Samsung lost 20 billion won (US$12
million), compared with a profit of 2.21 trillion won for the same period a year
ago.
That marked the company's first quarterly net loss since the third-quarter of
2000, when it started announcing quarterly results.
Fourth-quarter operating loss was at 940 billion won, compared with a profit of
2.8 trillion won the previous year, Samsung said. Sales also fell to 18.45
trillion won from 20 trillion won.
The operating loss was far below the predictions of most analysts. Samsung was
expected to post an operating loss of 251 billion won, according to the latest
forecast by FnGuide Inc., a financial information service provider that tracks
earnings forecasts by South Korean companies.
"The fourth-quarter results were worse than expected because of faster declines
in prices of chips and LCD panels," said Hyundai Securities analyst Kim
Jang-yeol.
Samsung, also the world's largest maker of liquid-crystal displays and the No. 2
maker of mobile phones, has been hurt by sinking demand for semiconductors,
mobile phones and other consumer electronics as the global economic recession has
sapped demand for these products.
The disappointing result pushed down shares of Samsung, South Korea's biggest
stock with a market value of around 65 trillion won, 4.1 percent to close at
442,000 won, prompting a 2.05 percent fall in the broader market.
"The earnings figures clearly showed Samsung Electronics isn't immune from the
global economic recession," said Daewoo Securities analyst Song Jong-ho.
During the fourth quarter of last year, Samsung posted an operating loss of 560
billion won in its semiconductor division.
Operating loss at its LCD division was 350 billion won, while the company's
handset division reported an operating profit of 160 billion won.
For 2008 as a whole, Samsung posted a net profit of 5.53 trillion won, down 26
percent from a year ago. Full-year sales gained 15 percent to 72.9 trillion won.
Samsung is not the only electronics company struggling from the global economic
recession.
On Thursday, Japan's Sony Corp. said it expects to post a net loss of about $1.7
billion for the fiscal year to March. On the same day, LG Electronics Inc. of
South Korea said it swung to a net loss of 672 billion won for the
October-December period last year.
In order to ride out the tough times, Samsung announced last week a major
restructuring plan to combine its four business operations into two major
divisions to "speed up the decision-making process."
The company also replaced all of its chief executives at its overseas affiliates,
while reassigning 85 percent of its 1,400 employees at its headquarters in Seoul
to production lines, sales operations and regional offices.
In a separate filing, Samsung said it signed a five-year cross-licensing
agreement on LCD patents with Chunghwa Picture Tubes Ltd. of Taiwan.
The company also said it plans to pay 5,000 won per common share in its 2008
dividend.
(END)