Samsung's CE Unit Sees 4% Sales Rise

Seoul, South Korea — Samsung Electronics digital media business sales moved upward 4 percent in the third quarter, hitting $1.7 billion, compared with $1.6 billion in the year-ago period. Consumer electronics products account for a majority of segment volume.

However, a stagnant domestic market sent CE segment profit downward in the third quarter, with Samsung reporting an operating loss of $29.1 million in its digital media business, compared with a slight profit of $1.7 million in the same three months in 2003.

Despite depressed demand in its domestic market and intensifying competition overseas, the telecommunications network segment at Samsung registered a 29-percent increase in sales, coming in at $4.1 billion, compared with a year-over-year $3.3 billion. At the same time, operating profit in the segment slipped about 17 percent to $537.6 million, compared with a year-over-year $644.2 million, as Samsung faced increased pricing pressure from competitors.

Mobile phones accounted for $4 billion of the telecommunications network segment sales in the third quarter, up from $3 billion in the same three months a year ago. Samsung said it sold 22.7 million cellphones in the third quarter, and 65.5 million cellphones in the first nine months of 2004, surpassing the 55.6 million sold throughout all of 2003.

Consolidated third-quarter sales at Samsung jumped 27 percent, reaching $12.6 billion, compared with $9.7 billion in the third quarter of last year. Consolidated operating profit climbed to $2.41 billion, up from $1.8 billion a year earlier, while net income jumped to $2.37 billion, compared with a year-ago $1.6 billion.

However, hurt by decreasing margins in both flat-screen televisions and cellphones, Samsung's profits began to slow in the second half. In the first half, the company's flat-screen, cellphone and chip businesses helped Samsung double its results of the first six months in 2003. In the second half, rising oil prices and other economic conditions helped put a damper on CE product operating margins, which should continue into the fourth quarter. Nevertheless, the final fourth months of 2003 could see an increase in unit sales of both cellphones and flat-screen TVs, following price cuts, said Samsung.