Mobile phones boost Samsung`s profit
Samsung Electronics Co., one of the world`s top technology companies, announced its first net profit gain in four quarters Friday, led by record sales in its mobile phone division.
Samsung said it earned 2.19 trillion won ($2.4 billion) in the three months ended Sept. 30, a gain of 1 percent from the same period last year. The gain, which surprised analysts, snapped three straight quarters of profit decline.
Sales during the quarter rose 9.6 percent to a record 16.68 trillion won ($18.16 billion) from 15.22 trillion won a year earlier, the company said.
"Record quarterly sales in the telecommunication handset business, coupled with a strong performance by the semiconductor business despite challenging market conditions, fueled the company`s overall performance," Samsung said in a news release.
Mobile phone sales rose to 42.6 million handsets, the company said.
"We are growing at a triple speed vis a vis the market," Chu Woo-sik, head of Samsung`s investor relations, told a conference call, adding that mobile phone growth was strong in both emerging and advanced markets.
Samsung, once known for manufacturing low-priced televisions for export to the Third World, has emerged in the past decade as Asia`s largest technology company and is the world`s largest manufacturer of computer memory chips. The company is also the world`s top producer of flat-screen televisions.
Samsung`s mobile phone business has emerged recently as a particular bright spot. Samsung supplanted Motorola Inc. in the second quarter as the world`s No. 2 manufacturer of mobile phones behind Finland`s Nokia Corp.
The third-quarter result was better than expected.
The average estimate of nine analysts surveyed by Dow Jones Newswires forecast that the company would post a net profit of 2.14 trillion won ($2.33 billion). They expected sales to have risen to 16.6 trillion won ($18.1 billion).
The company`s overall profitability hinges strongly on its chip operations, which are heavily swayed by seasonal and cyclical price swings.
Samsung manufactures both DRAM, or dynamic random access memory, chips used in personal computers, as well as NAND chips used in digital cameras, music players and mobile phones.
Prices for chips slumped in the third quarter.
Samsung`s average selling price for its benchmark DRAM chip fell 55 percent from the same period last year, according to Chung Chang-won, an analyst at Lehman Brothers in Seoul. Samsung`s price for NAND chips fell 42 percent, he said.
Investor`s cheered the results, sending Samsung`s stock price higher.
Samsung shares rose as much as 3.1 percent to 572,000 won ($622) following the early session earnings announcement, before paring gains.
The company`s share price has languished this year, having fallen 9.5 percent as of the close of Thursday`s session, lagging other blue chips and the broader market.
The Korea Composite Stock Price Index, the country`s benchmark exchange, has surged 44 percent this year. Shares in steel maker Posco have more than doubled, while those of shipbuilder Hyundai Heavy Industries` have more than tripled.
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