Samsung Strong in Q3

By Colleen Taylor -- Electronic News, 10/16/2006

Samsung Electronics Co. Ltd. posted Q3 net income of $2.29 billion (2.19 trillion won) on revenue of $15.9 billion ( 15.22 trillion won).

Revenues were 8 percent higher than the company's Q2 results and 5 percent higher than Q3 2005, while the net income was 45 percent higher than Q2 and 16 percent higher year-over-year.

Operating income for Q3 was $1.94 billion (1.85 trillion won).
Operating profit of the Semiconductor Business reached $1.33 billion (1.27 trillion won) on revenue of $5.13 billion (4.91 trillion won) in Q3, an increase of 29.5 percent from Q2 due to strong demand of memory chips from the PC sector, the company said.

In the memory-chip business, Samsung said it capitalized on the global shortage in supply of DRAM chips that subsequently led to a surge in DRAM prices, increasing profit margins by 3.7 percent from Q2. The company said it expects the memory business to continue to grow and produce higher returns in Q4, and added that the price of DRAM chips should remain strong.

In addition, migration to the advanced process technology, in particular 60nm 8Gbit NAND flash technology, is expected to reduce manufacturing costs and improve profitability, the company said. Samsung said it plans to invest an additional $1 billion (1 trillion won) to increase production capacity of memory chips, which the company said should create revenue opportunities next year.

The company's telecommunication network business posted revenue of $4.9 billion, an 11 percent boost over Q2, which the company attributed to robust sales of the "Ultra Edition" handsets in Europe. The company expects the business to continue to post increased profits in Q4 as the overall 3G market grows.

The LCD business reported revenue and operating income of $3 billion (2.996 trillion won) and $167.7 million (160 billion won), respectively, with revenues 37 percent higher than last quarter. Prices of IT panels recovered ahead of the seasonally-robust period and sales of 40-inch and larger TV panels remained strong, the company added.

Samsung's digital media business posted an operating loss of $104.6 million (100 billion won) on revenue of $1.7 billion (1.64 trillion won), on a parent basis. However, equity gains, which Samsung claims "better depict the global performance" of the digital media business, jumped to $565 million (540 billion won) in Q3 from $303.5 million (290 billion won) in Q2. The majority of the equity gains were generated from strong sales of digital media products, including LCD TVs, Samsung said.

Sales of its digital appliance business increased 7.6 percent quarter-on-quarter to $868.4 million (830 billion won) from favorable sales of refrigerators and washing machines, the company said.

Looking ahead, the company expects more good financial news in Q4. "We anticipate our key business units to experience significant tailwinds in the fourth quarter, a seasonally strong period," Woosik Chu, senior VP and head of Samsung Electronics' investor-relations team, said in a statement.

Samsung reported slightly higher revenues in its Q2 earnings statement.