Samsung Electronics Reports First Quarterly Loss

By: AP
By: AP

SEOUL, South KoreaSamsung Electronics, the world's largest manufacturer of flat screen televisions, memory chips and liquid crystal displays, posted its first ever quarterly loss Friday as the global economic slump hit prices and demand for mainstay products.

Samsung lost 20 billion won ($14.37 million) in the three months ended Dec. 31, the company said in a statement. Samsung posted 2.21 trillion won in net profit a year earlier.

The net loss was Samsung's first since the company began reporting results on a quarterly basis in 2000 and underlines the challenges facing electronics companies worldwide as major economies flounder in recession.

The Suwon, South Korea-based company has struggled with falling prices for chips and flat screens and waning consumer appetite. Japanese electronics giant Sony Corp. on Thursday projected its first annual loss in 14 years.

The results showed that "our company could not escape the rapid decline in the global economy," Robert Yi, vice president for investor relations, told a conference call.

The result wasn't as bad as the net loss of 92.93 billion won forecast by an Associated Press survey of 10 analysts. But on an operating basis, the company racked up red ink to the tune of 940 billion won, much worse than the forecast of a loss of 319 billion won. That loss was also a first.

Operating earnings are seen as a direct indicator of core business performance while net profit or loss also reflects taxes, dividends, asset sales and other items.

"The global economic slowdown had an adverse effect on consumer purchases of electronics goods in the fourth quarter, traditionally a strong period for electronics companies," Samsung said in the release.

Fourth quarter sales rose to 18.45 trillion won from 17.48 trillion won the year before, but less than the 20 trillion won expected by analysts.

Samsung shares fell 3.4 percent to 445,500 won in morning trading. The company announced results less than one hour after the stock market opened.

On the bright side, Samsung said mobile phone sales rose to a record during the quarter despite a 5 percent contraction in the global market for handsets. The company is the world's No. 2 mobile phone manufacturer.

Samsung announced a major restructuring last week, consolidating business operations into two divisions. This week the company said it had replaced most of the heads of its overseas regional headquarters.

It also announced the redeployment of more than 80 percent of the almost 1,400 employees at its Seoul headquarters.


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