Samsung Electronics reports 72 pct drop in Q1 earnings

(ATTN: UPDATES share price in 4th para; ADDS more details in last eight paras)
SEOUL, April 24 (Yonhap) -- Samsung Electronics Co., the world's leading computer
memory chipmaker, said Friday that its first-quarter earnings fell 72 percent as
weak demand dragged down prices amid the economic downturn.

Net profit reached 619 billion won (US$462 million) in the January-March period,
compared with a profit of 2.19 trillion won a year earlier, the company said in a
regulatory filing.
Sales increased 8.5 percent to 18.57 trillion won over the cited period, while
operating profit dropped to 148 billion won from 2.15 trillion won, it said.
Shares of Samsung Electronics were trading at 612,000 won on the Seoul bourse as
of 10:32 a.m., down 2.39 percent.
Samsung, which had booked its first quarterly loss of 22 billion won in the
previous quarter, is expected to see its business performance improve as the
battered memory chip sector shows signs of emerging from a severe downturn,
according to analysts.
"The first-quarter earnings were better than expected, and its earnings will
improve down the road as production cuts may help ease an industry glut and price
gains," said Kwak Byeong-yeol, an analyst at KB Securities.
Industry-wide output cuts have helped drive up prices of dynamic random access
memory (DRAM) chips by more than 60 percent this year, while prices of flash
memory chips have more than doubled.
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.
Its semiconductor business suffered an operating loss of 670 billion won in the
first quarter, the second straight quarterly deficit, hit by falling demand and
weak prices. That compared with a profit of 193 billion won a year earlier.
Its LCD division also suffered an operating loss of 310 billion won, compared
with a profit of 1 trillion won a year earlier, as demand for TVs and computers
slumped during the recession, driving down panel prices.
But Samsung's information and telecommunication business line logged an operating
income of 1.12 trillion won, boosted by robust sales of mobile handsets, which
offset a slump in its other business divisions.
Samsung said the average selling price for its handsets rose 2 percent from the
fourth quarter of last year on increased sales of high-end products, though the
total volume of sales remained flat.
Despite better than expected results, Samsung said the second-quarter outlook
remains uncertain.
"Despite the industry downturn, our first-quarter earnings were better than
expected," said Lee Myung-jin, an official with Samsung Electronics' investor
relations team. "But it is still premature to be optimistic about an upturn in
demand and the economic cycle."
sam@yna.co.kr
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