Samsung Elec Profit Jumps, Outlook Strong
Samsung's long-suffering chip division is expected to turn the corner by the second half.SEOUL (Reuters) - Samsung Electronics, the world's top maker of memory chips, beat forecasts with a 37 percent rise in quarterly profit on stellar performances in flat screens and mobile phones, sending its shares 4 percent higher. Samsung's outlook remains solid thanks to its strength in TV screens and handsets, lifted by a softer Korean won and robust demand, while a long-suffering chip division is expected to turn the corner by the second half.
Hynix Semiconductor, the world's second-biggest memory chip maker, disappointed the market on Friday with a net loss that was almost 50 percent bigger than consensus.
CHIP PRICES TO RECOVERMakers of dynamic random access memory (DRAM) worldwide are hoping that spending cutbacks from cash-starved chip makers and improving demand ahead of the back-to-school and gift-giving seasons later in the year will help them back into profit. Supporting those recovery hopes, market research firm iSuppli upgraded its rating on the DRAM market to "neutral" from "negative," citing indications that the worst was over. Samsung, also the world's top maker of large liquid crystal display (LCD) screens and flat TV sets, posted January-March net profit of 2.19 trillion won ($2.2 billion), beating a 2.01 trillion won forecast from 10 analysts polled by Reuters. The technology powerhouse, flagship of the Samsung Group, whose chairman resigned this week over a tax scandal, earned a 1.6 trillion won net profit a year ago and 2.2 trillion won in the fourth quarter. Shares in Samsung, valued at more than $100 billion, gained 4.4 percent on Friday, hitting their highest close in two years and outpacing the wider market's 1.4 percent gain. "Second-quarter earnings will be in line with the level seen in the first quarter," said Chu Woo-sik, Samsung's executive vice president of investor relations, during an earnings conference. "A meaningful recovery will come in the second half," Chu said, referring to the memory chip market. In 2008, Samsung is expected to earn 9.27 trillion won, up from 7.4 trillion won last year, according to Reuters Estimates. Samsung said it expected "very little" price decline for DRAM chips in the second quarter, after a 15-month downward spiral during which prices of some chips lost 90 percent of their value. Samsung also said it expected prices of NAND flash memory chips to fall by only a low single-digit percent.