Samsung Electronics
Reports First Quarter Results

Samsung Electronics reports revenue of 14.39 tln won Posts operating profit of 1.18 tln won and net profit of 1.60 tln won

Samsung Electronics Co., Ltd. on April 13 announced financial results for its 2007 first quarter ended March 31, 2007. For the quarter, the company posted a net profit of 1.60 trillion won on revenue of 14.39 trillion won. Operating profit for the quarter was 1.18 trillion won.
"There were many difficulties in the first quarter due to a sluggish demand for key products and a decline in their prices due to an oversupply in a seasonally weak period of the IT Industry,"said Samsung Electronics'investor-relations team.
"Nevertheless, we believe we have secured a footing for better earnings by focusing on enhancing competitiveness in the long run rather than pursuing short-term profits,"it said, noting that the price for semiconductor products began to stabilize in March and market conditions is expected to recover in the second half.
Operating profit of the Semiconductor Business reached 540 billion won on revenue of 4.48 trillion won in the first quarter. The decline in the operating profit was mainly due a sluggish demand for both DRAM and NAND flash memory chips due to seasonality.
Temporary capacity of DRAM chips decreased due to a transition from 8-inch wafer to 12-inch wafer in some Fabs in the first quarter. However, the company expects to gain cost leadership via the 12-inch wafer transition.
The Semiconductor Business'profit was also hurt by the price of NAND flash memory chips in the industry, which fell nearly 50 percent in the first quarter. However, the company is expected to benefit from maintaining favorable portfolio mix of DRAM and NAND amid expectations that the NAND flash memory chip prices will rise in the second half due to a supply shortage and rising demands.
In addition, migration to the 50-nm technology is expected to help the company secure cost leadership in the second half.
The company expects DRAM chip price to stabilize because price elasticity of DRAM will drive the main memory demand for PCs.
The Telecommunication Business posted an operating profit of 600 billion won on revenue of 4.6 trillion won. Operating profit margin was 13 percent in the first quarter.
Robust sales of premium handsets, including the "Ultra Edition,"and a solid performance in China and other emerging markets helped boost sales to a record of 34.8 million units.
The strong performance is impressive considering the fact that first quarter is traditionally a seasonally weak period.
The Telecommunication Network Business plans to expand the sales of handsets by continuously launching more premium handsets, and expects to exceed its annual sale target of 133 million units.
In the first quarter, the company changed its handset shipment and ASP calculation standard from headquarters shipment based to global sales based.
The LCD Business posted a revenue of 2.84 trillion won, and operating profit was 73.1 billion won. The 11 percent drop in revenue from the previous quarter was due to sluggish demand for large panels and a continued drop in panel prices.
In the second half, the LCD Business expects seasonality to help increase demand for panels, and expects to see higher returns with the eighth-generation line starting operation earlier than scheduled.
The Digital Media Business posted an operating loss of 35.5 billion won on revenue of 1.55 trillion won, on a parent basis. The robust sales of "Bordeaux TVs"generated profit for the company.
In the second half, the Digital Media expects its sales and profit margin to improve with its hit "Bordeaux TV"and the launch of new products that is unique in design and function.
The Digital Appliance Division posted a revenue of 770 billion won thanks to strong sales of air conditioners and its efforts to reduce costs. Operating loss was at 200 million won, a major improvement from the previous quarter. nw