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Samsung CE Segment Sales Off 16%

10/14/2005 12:26:00 PM Eastern

Seoul, South Korea — Sales in the digital media segment at Samsung Electronics dropped 16 percent in the company’s fiscal third quarter, despite strong movement of LCD and PDP televisions and LCD monitors.

Three month sales in the digital media segment, mainly consumer electronics, came in at $1.58 billion, down from $1.87 billion in the same quarter a year ago. The company reported continued strong demand for large-sized flat-panel TVs.


Samsung To Pay Fine In Price Fixing Probe

San Francisco — Samsung Electronics has pleaded guilty to a U.S. criminal chip price-fixing charge and is paying a $300 million fine for its part in what government prosecutors termed a global conspiracy.

According to published reports, one-count felony charge was filed in federal district count, here, this week. Two other chip-making companies also have pleaded guilty in the government probe.

The chips involved, called DRAM chips, are used in PCs, printers, handheld devices and other products.

Samsung, according to a statement, said it considers the case closed and that it “strongly supports fair competition and ethical practices, and forbids anti-competitive behavior.”

The $300 million fine is settling directly to the company’s bottom line, with net profit down 30 percent in the company’s fiscal third quarter. The lower profit was hit hard by decreasing prices of memory chips and flat screens, but also took into account a large monetary reserve set aside by Samsung to handle any costs stemming from the chip investigation.

According to published reports, Samsung had escrowed about $192 million toward payment of a fine, and this amount figured prominently in its lower quarterly income. The company already had set up a $100 million reserve in December of 2004 to handle any costs relating to the government investigation and potential monetary ramifications.

Jeff Malester

Samsung said its digital media segment narrowed its three month operating loss for the period, ending Sept. 30, recording a negative $19.2 million, down from a loss of $31.7 million in the third quarter last year.

Even though Samsung sold a record 26.8 million mobile phones in the third quarter, up from 24.4 million in the previous quarter, handset sales in the period dropped 4 percent, down to $4.2 billion from a year-ago $4.4 billion. The company reported increased shipments in the United States.

Samsung’s telecommunications segment, mainly mobile phones, saw a 5 percent slide in third quarter sales, dipping to $4.4 billion, from $4.6 billion in the same quarter the previous year. Segment operating profit decreased less than 1 percent, sliding to $528.5 million, from $586.2 million in the same quarter last year.

LCD segment sales in the third quarter increased 41 percent, reaching $2.6 billion, from a year-on-year $1.8 billion as the company posted strong panel shipment growth, resulting from seasonality and attractive panel prices. Segment operating profit rose to $288.3 million, up from $221 million in the same quarter the prior year.

Consolidated sales at Samsung edged upward 1 percent in the third quarter, hitting $14 billion, compared with $13.8 billion in the same three months last year.

However, the company reported a 23 percent decline in consolidated operating profit, to $2 billion, from $2.6 billion year-on-year, and consolidated net profit, to $1.8 billion, down 30 percent from the $2.6 billion recorded in the same quarter a year earlier, due in part to decreasing prices of flat-screens and chips.

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