By Cho Hyung-kwon
Staff Reporter


Samsung Electronics, the world’s largest memory chipmaker, said Friday that third quarter net profit declined more than 14 percent from the previous quarter as prices of flat screen displays fell and competition in the handset market increased.




The world’s largest liquid crystal display (LCD) maker said net profit fell 14.2 percent from the previous quarter to 2.68 trillion won, falling below 3 trillion won for the first time since the fourth quarter last year.
Despite net income rising 46.2 percent from a year earlier, investors and analysts were disappointed with Samsung’s results and some were concerned about the company’s earnings outlook.

Shares of Samsung Electronics fell more than 1.3 percent immediately following the earnings announcement and dropped 1.57 percent, closing at 437,000 won.

``LCD prices dropped sharper than expected and handset sales were also disappointing,’’ Daewoo Securities said.

``Outlook after the fourth is likely to be mixed depending on the economic cycle of each business division. Semiconductors seem to be improving but the outlook for the LCD market is uncertain in the fourth quarter,’’ the local brokerage firm said.

Samsung’s LCD division saw its operating profit tumble 72 percent from the second quarter to 225 billion won. Operating profit at the telecommunications division, including handsets, also fell 23 percent to 610 billion won.

``Price declines of large panels and weak demand led to the sharp fall in LCD sales and operating profit,’’ Samsung said in a statement.

LCD prices have fallen by about 30 to 35 percent in the third quarter, as demand could not keep up with growing supply. Goodmorning Shinhan Securities expects LCD panel prices to fall by an additional 10 to 15 percent in the fourth quarter and another 10 to 15 percent in the first half of 2005.

Samsung’s total operating profit fell 26.5 percent from the previous quarter to 2.7 trillion won on sales of 14.3 trillion won, down 4.2 percent from the second quarter.

The company said it was satisfied with the results and was confident that fourth quarter performance would be robust based on its competitive edge over competitors.

``Despite the challenging business environment, we believe we did a good job and are quite satisfied,’’ said Chu Woo-sik, senior vice president of the IR team.

The semiconductor sector posted revenues of 4.7 trillion won, the largest ever, and operating profit of 1.9 trillion won. The digital media division and consumer electronics sectors posted net losses of 33 billion won and 9 billion won, respectively.

kevincho@koreatimes.co.kr