Samsung CE Biz Reports 19% Sales Slide

By Jeff Malester On Jul 25 2005 - 6:00am

Second-quarter revenue in the digital media segment at Samsung Electronics dropped 19 percent, down to $1.6 billion from a year-on-year $1.9 billion, as the company reported weak seasonal demand and discontinuation of low-end products for the segment's mainly consumer electronics mix.

The CE segment recorded increased shipments of premium televisions during the second quarter, ended June 30, namely PDP and LCD units.

Samsung posted a wider operating loss for its CE business during the second three months, climbing to a negative $48.4 million from a loss of $6.8 million in the second quarter of 2004.

The company's mobile phone sales declined 9 percent in the second quarter, reaching $4.1 billion, compared with a year-on-year $4.5 billion. Overall shipments of handsets were flat at 24.4 million units, while shipments to North America increased. Samsung expects continued growth of replacement demand in North America, as the global handset market increases to 710 million units through the full year.

Sales in the company's telecommunications segment, Samsung's largest, and mainly phones, declined 10 percent in the second quarter, to $4.3 billion, from $4.8 billion in the same period a year earlier. Operating profit for the segment in the three months dipped to $512.6 million, from $773.7 million last year, as margins for handsets narrowed.

LCD segment sales in the second quarter dropped 14 percent, hitting $2.1 billion, down from $2.4 billion year-over-year. Lower margins for flat-screen TVs led to a 32 percent decline in LCD segment operating profit, down to $96.7 million in the second three months from a year-ago $793 million.

Consolidated sales at Samsung decreased 9 percent in the second quarter, down to $13.1 billion from a year-ago $14.5 billion.

Lower prices for memory chips and the ongoing lower margins for flat screens and mobile phones contributed to a 46 percent drop in consolidated net profit during the second three months, coming in at $1.6 billion, compared with a year-on-year $3 billion. Operating profit in the three months decreased 56 percent to $1.6 billion from a year-earlier $3.6 billion.