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Samsung Chip Business Reduces Q4 Net Profit

Seoul, South Korea — Samsung Electronics reported higher sales, but a slightly lower net profit in its fourth quarter, ended Dec. 31, as its memory-chip business cut into gains in LCD TVs, among other CE categories.

During the quarter Samsung posted record revenues of $18.7 billion, up from $16.8 billion during the final quarter of last year. In net income Samsung posted $1.9 billion for the period vs. $2.53 billion for the previous year.

Samsung filed its financial results the same day that special prosecutors from the South Korean government investigating an alleged corruption scandal searched an office of chairman Lee Kun-Lee, according to various media reports including the Wall Street Journal. Samsung has denied any wrongdoing.

For Samsung’s LCD business quarterly revenues were $4.76 billion compared with $3.4 billion during the same time last year. Operating profit grew 37 percent to $982.3 billion with a profit margin of 21 percent, the company reported. Since the fourth quarter, sales for all applications such as panels for IT products and TVs rose sharply, with prices maintaining strength throughout the quarter. Samsung is targeting sales in the large panel segment with sales of more than 100 million panels.

Its digital media business reported an operating loss of $138.8 million on revenue of $1.75 billion for the quarter, but the unit’s consolidated operating profit reached $427.1 million on consolidated revenue of $1.07 billion. Samsung said that “robust sales” of flat panel TVs positioned the company as “the market leader in three categories — overall TV sales, flat-panel sales and LCD TV sales.”

In its telecommunications business division, the company’s mobile phone revenues were $5.41 billion in the fourth quarter vs. $4.6 billion for the same time last year. Sales of handsets overall achieved a quarterly recorded of 46.3 million units due to “robust sales of premium phones such as the ‘Ultra Edition,’ increased sales of 3G phones,” the company said.

As for year-end sales, Samsung sold more than 161 million units, exceeding the previous year’s total of 114 million and “solidifying Samsung’s position as the second-largest manufacturer worldwide in the mobile phone market.”

In its digital appliance division reported a $32 million operating loss for the quarter, which was lower than the loss in the previous year’s fourth quarter. A sales increase in premium products and cost-saving activities are expected to boost its performance in 2008, the company said.