In mixed set of financial results Korean electronics giant Samsung Electronics Co. Ltd. announced that its first quarter 2005 net income slumped 18 percent from the fourth quarter of 2004.
Lower margins on mobile phones and a fall in the price of flat-screen televisions were blamed for the fall which came on the heels of disappointing financial results from Apple Corp., Sun Microsystems Inc. and IBM Corp..
Samsung said it does not expect the "challenging business conditions" to improve in the second quarter.
The company recorded overall sales of 13.8122 trillion won (about $13.6 billion), a 0.6 percent decrease from the previous quarter and net income of 1.4984 trillion won (about $1.5 billion), a drop of 18 percent from the previous quarter. While sales decreased, operating profits increased on the back of growth in NAND flash memory business, favorable mobile phone sales and efforts to reduce selling, general and administrative expenses, the company said.
However, sales and operating income in Samsungs' semiconductor business for the quarter decreased sequentially by 6 percent and 13 percent respectively to 4.4756 trillion won (about $4.41 billion) and 1.3851 trillion won (about $1.36 billion), respectively, because of seasonal factors and currency exchange rates.
With a record quarterly mobile phone shipment of 24.5 million units, the Telecommunication Network Business recorded sales of 4.8394 trillion won (about $4.77 billion), a 12 percent sequential rise, and operating income of 840.5 billion won (about $830 million). This performance is attributed to the company's strategy to expand output in the first quarter
The LCD business reported a 3 percent sequential drop in trade and a 20 percent drop compared to the same quarter a year before with revenue and operating income figures of 1.8983 trillion won (about $1.87 billion) and 23.1 billion won (about $22.7 million), respectively.
"While we do not expect conditions to improve in the second quarter, Samsung Electronics will strive to sustain its outstanding financial performance through new growth opportunities, such as the commercialization of DMB services and production commencement at our seventh generation LCD line," said Woosik Chu, senior vice president and general manager of the Samsung investor relations team, in a statement.