Samsung eyeing weak first-quarter results

Giving estimates ahead of official first-quarter results, Samsung expects lower operating profits as it faces sluggish demand for LCDs and intense competition in the tablet market.

Samsung's first quarter is likely to show an increase in sales but a drop in operating profits due in part to weaker demand for its LCDs.

Although actual results will be announced at month's end, Samsung today offered a peek at its first quarter. The Korean electronics company estimated that operating earnings for the quarter ended March 31 would fall to between 2.7 trillion won ($2.5 billion) and 3.1 trillion won, down from 4.4 trillion won in in the year-ago quarter.

Sales are expected to rise to between 36 trillion and 38 trillion Korean won, up from 34.64 trillion won a year ago. That range compares with analysts' estimates of 37.68 trillion won, according to The Wall Street Journal. The company didn't provide a forecast on net profits for the quarter.

Samsung has been hit by a couple of factors. Weaker demand for its LCD panels combined with lower TV prices have reduced profit margins in that area of the business. Its Galaxy Tab tablet has also faced intense competition against Apple's iPad and various Android-based tablets.

By contrast, Samsung had a solid fourth quarter and 2010 thanks in part to healthy sales of the Galaxy S line of smartphones and strong revenue growth in the semiconductor sector.

Looking past the first quarter, analysts expect to see better results ahead. Quoted in the Journal, an NH Investment & Securities analyst sees a rebound in Samsung's chip business as a result of higher DRAM and NAND prices along with a return to profitability for the LCD division following a first-quarter loss.

 

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