Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile
phones, turned to a profit in the fourth quarter from a loss a year earlier after prices increased and demand for televisions rose.
Operating profit was about 3.7 trillion won ($3.3 billion), plus or minus 200 billion won, compared with a loss of 740 billion won a year earlier, the Suwon, South Korea-based company said in a statement today.
Samsung shares climbed 77 percent last year as prices of memory-chips tripled on demand for personal computers, and income from the sale of mobile phones and televisions surged. Analyst expectations that continuing sales growth will help the company post record profit this year boosted the stock yesterday to its highest close.
“Chips will continue to be the key driver for earnings growth this year, and the TV business will add to momentum amid the global economic recovery,” said Kim Tae Woon, a fund manager at NH-CA Asset Management in Seoul, which oversees the equivalent of $8.8 billion in assets. “The stock has risen a lot, but it will maintain the current level given the strong earnings outlook.”
Samsung fell 3.3 percent to close at 813,000 won on the Korea Exchange, while the benchmark Kospi index declined 1.3 percent. The stock has gained 1.8 percent this year, extending an 11 percent advance in December, its steepest monthly gain in five months.
Taking Profit
“The decline today is probably because
Dietary supplements some investors are taking profit,” Lee Sun Tae, an analyst at
Meritz Securities Co. “But it doesn’t change the better earnings outlook for Samsung’s businesses for this year.”
Macquarie Group Ltd. and CLSA Asia-Pacific Markets raised their share price estimates on Samsung this week, citing higher earnings prospects.
The preliminary figures disclosed today are consolidated, meaning they include earnings from overseas affiliates. Revenue was between 38 trillion won and 40 trillion won, Samsung said. The company began providing quarterly guidance in July. No breakdown was given of expected earnings among the company’s divisions.
Chip Business
It is forecast to post 14.4 trillion won in operating profit on sales of 142.8 trillion won this year, according to a separate Bloomberg survey of analysts. The company’s profit in 2009 was 10.9 trillion won on sales of 136.1 trillion won, based on today’s preliminary results, Samsung said.
Profit from the chip business probably accounted for half of the total operating income in the fourth quarter, compared with a loss a year earlier, according to the Bloomberg survey of analysts. Samsung’s flat-panel division probably posted a profit of 549 billion won, compared with a deficit of 240 billion won a year earlier.
The company’s mobile-phone division probably posted operating income that climbed more than five-fold to 724 billion won, while the digital media division, which makes televisions, probably had a six-fold increase in profit to 618 billion won, according to the analyst survey.
TV Growth
Micron Technology Inc., the biggest U.S. producer of computer-memory chips, last month reported its first
quarterly profit in more than two years, while Nokia Oyj, the world’s No. 1 maker of mobile phones, said in December it expects its share of the global handset market to remain flat in 2010, while industry shipments will increase by about 10 percent.
Samsung, the world’s largest television maker, said earlier today it aims to increase sales of flat-screen TVs by about 30 percent this year, driven by higher demand for more expensive models. The company expects LCD TVs using light-emitting diodes, or LEDs, as screen backlights instead of conventional fluorescent lights to help drive up shipments.
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