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Samsung Q1 CE Segment Sales Rise 19%

Seoul, South Korea — With flat-screen televisions blazing a hot sales trail for Samsung Electronics in the year’s first quarter, the company’s digital media segment, mainly consumer electronics, enjoyed a 19 percent sales increase, reaching $1.9 billion, up from $1.6 billion in the year-ago period.

The digital media division, which accounted for a 15 percent share of overall Samsung first quarter sales, includes audio and video products — primarily digital televisions, DVD players and computers. The segment’s share of total company sales dropped from 20 percent in the first three months of 2003.

Operating income for Samsung’s digital media segment posted the lowest profit margin among all company business segments in the first three months, at 6.5 percent, and recorded $12.1 million in operating profit, down from $83.1 million year-on-year.

Flat-screen television prices remained unexpectedly high in the first quarter, due mainly to a key components shortage, but pricing is expected to drift downward as the year moves along. Samsung said it maintained product leadership in LCD and PDP televisions during the quarter, while it claimed a 12 percent worldwide share for DTV.

The company’s telecommunication segment, primarily wireless handsets, and its largest division, saw first quarter sales jump to $4.2 billion from a year-ago $2.8 billion. The segment, which accounted for nearly 34 percent of Samsung sales, took down $1.1 million in operating income in the first three months, about double the $564.8 million recorded in the same three months in 2003. Its share of first quarter overall sales in 2003 was 35 percent.

Wireless handsets alone in the telecommunication segment accounted for $3.6 billion in first quarter sales, up from $2.5 billion year-over-year. Samsung reported record high quarterly shipments of phones, reaching 20 million units, up from 15.5 million units in the fourth quarter of last year. The company anticipates an increase in second quarter phone sales, with average prices remaining steady. Its total handset sales for the year are expected to top 65 million.

When first quarter sales of mobile phones and memory chips are added to flat-screen TVs, the trio combined to substantially boost overall first quarter sales and earnings. Samsung’s consolidated first quarter sales hit $12.5 billion, about a 58 percent jump, compared with $7.9 billion in the same three months a year earlier, while operating income reached $3.5 billion, up from $1.1 billion in the same period in 2003. Net income for the first quarter came in at $2.7 billion, nearly triple the $913.6 million taken down in the same three months last year.