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Samsung may report first ever quarterly loss

Samsung may report first ever quarterly loss
AP
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First Published: Wed, Jan 21 2009. 05 19 PM IST
Updated: Wed, Jan 21 2009. 05 19 PM IST
Seoul: Samsung Electronics Co. may post its first quarterly loss ever, hit by falling prices for memory chips and flat screen TVs as well as waning consumer demand amid the global economic slump.
Samsung, the world’s largest manufacturer of flat screen televisions, will likely announce a net loss of $67.7 million for the three months ended 31 December, according to the average forecast of 10 analysts surveyed by The Associated Press. Samsung earned $1.61551 billion in the same period the year before.
Samsung is scheduled to announce results for the fourth quarter of 2008 on Friday.
The Suwon, South Korea-based company is also the world’s biggest manufacturer of memory chips and liquid crystal displays. It ranks second behind Finland’s Nokia Corp. in mobile phones.
Samsung, however, has been struggling amid falling prices for chips and flat screens and declining consumer demand resulting from the global financial crisis and ensuing slowdown.
Net profit declined 44% in the third quarter from the same period in 2007.
The company announced a major restructuring last week, consolidating business operations into two divisions in a bid to navigate the choppy waters.
On Wednesday, Samsung said it had replaced the heads of overseas regional headquarters in North America, Europe, Southwest Asia, the West Asia and Russia and the other former states of the Soviet Union.
“Those people are very young and aggressive and fully understand the needs of the market and customers,” James Chung, a Samsung spokesman, said of the changes. The company has a total of eight overseas headquarters.
The company also announced that it was transferring more than 80% of the almost 1,400 employees at its Seoul headquarters to work in factories to help “speed up decision-making,” Chung said.
Samsung has never posted losses on either a net or operating basis since it began releasing quarterly results in the third quarter of 2000, according to the company.
Analysts expect the red ink to be even worse on the operating level, with the survey predicting a loss of $233.18 million.
Operating earnings are seen as a direct indicator of core business performance while net profit or loss also reflects taxes, dividends, asset sales and other items.
“The demand for components and sets decreased severely due to the economic crisis,” said Park Jeong-wook, an analyst at SK Securities.
Components mean chips and panels, while sets refer to finished consumer electronics products such as mobile phones and televisions.
Park said though television unit sales were not that bad, the glum economic situation forced Samsung to cut prices, thus hitting profitability.
Samsung’s fourth-quarter sales, meanwhile, are expected to have risen about 14% to $14.62 billion from $12.77 billion .
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First Published: Wed, Jan 21 2009. 05 19 PM IST