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From the New York Times, by Don Kirk:


Samsung Profits Fall 41%, but Investors See Recovery Ahead


EOUL, South Korea, April 18 — Samsung Electronics posted a 41 percent drop in first-quarter profit today but said it had overcome "economic instability" at home and abroad.


Although the slump was greater than some analysts had expected, investors appeared to share the company's outlook on the likelihood of a resurgence in coming months. Shares of Samsung closed up 4.3 percent, to 315,000 won, on the Korea Stock Exchange. The rise also reflected renewed optimism here about the economy since the end of the war in Iraq.


For the quarter, the company said net income fell to 1.13 trillion won, or $937 million, from 1.9 trillion won, or $1.5 billion, the highest in the company's history, in the period a year earlier. Revenue fell 3.3 percent, to 9.6 trillion won from 9.93 trillion.


Chu Woo Sik, Samsung's vice president for investor relations, mingled confidence with a cautionary note as he talked to analysts on conference calls in the morning and afternoon.


He acknowledged that "visibility is very cloudy" but said the company expected "a reasonably bright prospect for the second quarter" provided the price of semiconductors did not continue to decline on global markets. Samsung is the world's second-biggest maker of computer chips behind Intel and is No. 1 in the production of memory chips, ahead of Micron Technology.


Unlike both Micron and Hynix, the nearly bankrupt third-ranking manufacturer of memory chips, Samsung says it made a small profit from the chips. At the same time, the company is counting on its diversity as a manufacturer of liquid-crystal display monitors, cellphones and other products to keep it profitable if the semiconductor market fails to recover in the near future.


Samsung is also counting on investment in research and development and new plants to lower the cost of manufacturing semiconductors, monitors and other products. In the face of criticism from some investors, the company is spending 6.78 trillion won on capital spending this year, about 50 percent more than Intel.


The company acknowledged "stiff competition" in cellphones but has 10 percent of the worldwide market, with sales of 13.2 million handsets through March, up from 11.6 million in the fourth quarter last year. A Samsung spokesman said rising sales of handsets with color screens would more than compensate for a 5 percent decline in the average selling price of individual handsets.


Although sales were down 10.5 percent in the first quarter from the last quarter of 2002, the company announced an overall 19 percent sales growth in liquid-crystal displays along with a 4.8 percent increase in mobile phone sales.


The company was hard hit, however, by the credit card squeeze that has jeopardized the entire economy. The Samsung Card Company, an affiliate of the electronics company, suffered a net loss of 187 billion won in the first quarter, and Samsung Electronics has had to pour $100 million into the company to keep it afloat.


At the same time, the company sought to buttress its declining share price by spending 2.13 trillion won to buy back shares.
 

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Interesting that the article doesn't mention anything about the performance of Samsung's consumer electronics division. I would have thought that the sales of the DLP RPTVs and HD STB's would have gotten a mention, but I guess they're just a small drop in the Samsung bucket.


-phil
 
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