Samsung posts strong Q4, drops 2007 capex

By Colleen Taylor -- 1/12/2007

Samsung Electronics Co. Ltd. shared some good news and some bad today, with increases in its quarterly numbers but plans for a lower 2007 capex.

The South Korea-based electronics maven’s Q4 revenue of $16.68 billion (15.69 trillion Korean won) showed an increase of 3 percent over the previous quarter. Meanwhile, operating income for the quarter was $2.66 billion (2.05 trillion Korean won), an 11 percent increase from Q3. Net income for the quarter was $2.5 billion (2.35 trillion Korean won), a 7 percent increase over Q3.

"In the fourth quarter, key products powered a recovery in overall earnings despite price declines in some product categories, Samsung's differentiation strategy continues to boost profitability." Woosik Chu, senior VP and head of Samsung Electronics' investor-relations team, said in a statement.

However, Samsung has dropped its capex for the coming year. The company said that it has earmarked $8.6 billion (8.1 trillion Korean won) in capital expenditure for 2007, down from the $10.67 billion it laid out for 2006. Samsung was quick to note that though there is a decline, the capex is actually relatively similar to 2006 levels considering advanced spending at the end of 2006, foreign exchange effects, and the spending of $1.7 billion (1.6 trillion Korean won) at Samsung Austin Semiconductor and S-LCD, its joint venture with Sony, in 2007.

Samsung further offered a cautious Q1 outlook. "Samsung Electronics anticipates challenges in key product areas in the quarter, a seasonally weak period," Chu said. "However, we expect stable overall performance in the first quarter with higher demand for DRAM and IT panels from the launch of Windows Vista, a sales increase during the Chinese New Year and the recovery of profits in the mobile phone business.

"Our key businesses, such as DRAMs, NAND flash memory chips, LCDs, mobile phones, and flat-panel TVs, will enter into a growth momentum after the first half and we expect significant growth both in revenue and profits in the second half," Chu concluded.

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