Samsung Elec misses Q3 on flat screens, TVs

SEOUL, SOUTH KOREA: Samsung Electronics Co gave a weaker-than-expected earnings guidance for July-September, ending its second straight quarter of record results, hit by plunging prices of flat screens and TVs.

Samsung, also the world's No.2 maker of mobile phones, has reported record earnings as strong demand from China and improved corporate spending lifted sales of memory chips and flat screens, but smartphone sales stayed weak.

The South Korean electronics powerhouse is however facing challenges on all fronts as sputtering world economy has sharply cut demand for TVs and computers and exacerbated steep price falls of components such as chips and flat screens.

"I had earlier thought third quarter would peak, but apparently second quarter turned out to be a peak looking at today's numbers, which came a bit below the market consensus," said Shin Hyun-joon, an analyst at Tong Yang Securities.

"The downcycle would continue through second quarter of next year, and will see another upcycle from the second half with seasonally strong demand."

Samsung, the first major global technology firm to issue preliminary third quarter estimates, has performed strongly over chip rival Micron and held on to its No. 1 slot in TVs against Sony Corp and Panasonic.

Samsung is also challenging Apple Inc with its Galaxy S smartphone model, powered by Google's Android software.

On Thursday, Samsung estimated its third-quarter operating profit at a median 4.8 trillion won ($4.3 billion) of 4.6 and 5.0 trillion won range, lower than a consensus forecast of 5.2 trillion won polled by Thomson Reuters I/B/E/S.

That would be down 4 percent from the previous record of 5 trillion won in the preceding quarter but up 14 percent from the 4.2 trillion won reported a year ago. Samsung reports quarterly results in late October.

Sales were estimated at 40 trillion won.

Profit from its chips division is set to account for nearly 70 percent of Samsung's total profit in the third quarter.

Analysts forecast Samsung's profit will shrink to around 4 trillion won in the current quarter and stay around that level till the second quarter of next year due to weak prices of chips and flat screens.

Prices of dynamic random access memory (DRAM), mainly used in computers, have fallen as PC sales growth has shrunk due to growing economic uncertainty in the United States and Europe.

Shares in Samsung, Asia's most valuable technology firm worth $116 billion, have lost 1 percent so far this year, lagging a nearly 13 percent rise in the KOSPI.