Samsung sees best sales ever in Q4 but profit may disappoint

The company predicted its full-year 2010 results would be its best ever

Samsung Electronics, the world's largest memory chip and LCD panel maker, said its sales will likely reach a new all-time high in the fourth quarter, but its operating profit will fall substantially compared to the third quarter.

Samsung said its operating profit will reach approximately 3 trillion Korean won ($US2.67 billion) in the fourth quarter, while sales will hit 41 trillion won ($US36.49 billion). The 3 trillion won figure is down substantially from the 4.86 trillion won Samsung reported in the third quarter, while the 41 trillion won figure would beat its previous sales record of 40.23 trillion won, from the third quarter.

Executives from Samsung had said during an investors' conference in October that they expected a difficult fourth quarter due to concerns over slowing growth in the U.S. and Europe.

The company did not give any reason on Friday for the lower operating profit figure. Samsung is expected to announce fourth-quarter results by the end of this month.

Prices of two of the main components Samsung makes, LCD panels and DRAM memory chips, both fell during the fourth quarter, which could be the reason its operating profit slumped.

In a report titled "DRAM pricing collapse continues in December," market researcher iSuppli said that as of Dec. 10, contract prices for 2GB DDR3 DRAM had dropped by more than 50 percent since June, with similar declines in other kinds of DRAM. The company blamed softer demand for PCs and an growing supply of DRAM for the price decline.

That's good news for consumers because it can mean lower prices overall for PCs or that PC vendors will add more DRAM at negligible extra cost.

Things could get even better for consumers.

Isuppli said, "nothing is likely to stop prices from continuing their slide during the next six months."

Samsung is considered a technology industry bellwether because it is the world's largest producer of several products, including flat-screen TVs, DRAM, NAND flash memory chips and LCD screens. It's also the second-biggest mobile phone vendor.

The company on Friday also estimated its revenue for the fiscal year 2010 would reach 153.76 trillion Korean won, while operating profit was expected to be 17.28 trillion won.

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Dan Nystedt

IDG News Service
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