Samsung Electronics reported an 8.5% drop in its quarterly net profit Friday, hurt by lackluster shipments of flash memory chips and falling prices of flat screens.
Samsung earned 2.35 trillion won (US$2.50 billion) in net profit for the quarter ended Dec. 31, compared with 2.56 trillion a year earlier and 2.19 trillion in the previous quarter. Revenue came in at 15.7 trillion won, up from 15.52 trillion a year earlier.
The result in line with the 2.34 trillion won forecast by 29 analysts surveyed by Reuters Estimates.
The outlook for the first half of 2007 is bleak as the world's biggest memory chip maker will likely face further price pressures on semiconductors and flat screens. "Samsung Electronics anticipates challenges in key product areas in the (first) quarter, a seasonally weak period," said Chu Woo-sik, Samsung's senior vice president of investor relations, in a statement.
Samsung saw the overall profit margin at its mainstay chips division rise to 31% from the July-September period's 26%. But the South Korean firm was hurt by sluggish shipment growth in NAND flash chips that power digital gadgets and an unfavorable product mix in computer memory chips.
Samsung, the world's third-largest mobile phone maker, sold 32 million mobile phones in the fourth quarter, up from the third quarter's 30.7 million units, but profit margin in the handset division fell to 8% from 11% in the third quarter.
Samsung's LCD unit also underperformed last year's results, with margins coming in at 10% against 13% in the fourth quarter of 2005 as brisk sales were offset by falling prices. The fourth quarter margin in LCDs, however, was double that in the preceding quarter due to seasonal factors.
Shares in Samsung Electronics, the country's biggest stock worth $91.31 billion, rose 3% to 600,000 won, higher than the 1.5% gain in the wider market, after it announced a 1.8 trillion won share buyback.