Samsung Electronics' operating profit drops 26 pct on lower chip, LCD prices in Q2

13:56, July 07, 2011      

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Samsung Electronics, the world's largest maker of memory chips, televisions and flat screens, estimated Thursday that its second-quarter operating profit dropped 26.2 percent from a year earlier.

The preliminary estimate for operating profit posted 3.7 trillion won (3.48 billion U.S. dollars) during the April-June period, down 26.2 percent from a record 5.01 trillion won a year ago, Samsung said in a regulatory filing.

Second-quarter revenue was estimated at 39 trillion won, up 2.9 percent from the previous year, according to the filing. Samsung did not unveil its guidance for net profit and performance for each division. The final results will be announced later this month.

Market watchers had already expected Samsung to disclose a poor performance during the second quarter due to lower prices of memory chips and liquid crystal display (LCD) panels.

"Earnings growth at Samsung Electronics is projected to be slower in the second quarter due to a delay in display market rebound amid weaker TV demand, and a sharp downturn in the semiconductor sector amid sluggish PC demand," Kim Young-chan, an analyst at Shinhan Investment Corp., said in a report before the earnings guidance was released.

Samsung said last Friday it combined semiconductor and display divisions in a bid to spur the revival of its flat panel business under a single leadership.

The firm appointed Kwon Oh-hyun, president of its semiconductor business, as the chief who oversees Samsung's memory chip, system LSI and LCD panel businesses. Chang Won-kie, president of its LCD division, will leave his position and support the new chief and vice chairman Choi Gee-sung on chip and panel facilities.

"Samsung carried out personnel changes to censure Chang for poor performance in LCD business, which is expected to post an operating loss during the second quarter," Kim Jang-yeol, an analyst at Mirae Asset Securities in Seoul, told Xinhua before the release.

Kim noted Samsung's semiconductor business will likely show earnings growth in the second quarter, but chip performance will be poorer than initially expected.

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