Samsung Q1 profits disappoint on slow TV sales

First-quarter net profit declines by 30 percent year over year, though revenue was up 7 percent. The company's Display Panel business was hit especially hard.

Samsung posted somewhat disappointing first-quarter results today, though it did generate a sizable profit.

For the first quarter of 2011, Samsung reported revenue of 37 trillion Korean won ($34.5 billion), representing a 7 percent increase compared to the same period in 2010. The company posted a profit for the quarter of 2.78 trillion won, but that figure was down a substantial 30 percent year over year.

Samsung Galaxy S II
Samsung hopes for good things from its Galaxy S II smartphone, to be introduced in the current quarter. Bonnie Cha/CNET

Samsung attributed the declines to "lower semiconductor memory prices and reduced profitability in LCD panels and TV sets." The company also pointed to the devastating magnitude 9.0 earthquake that hit northeastern Japan last month.

The company's Display Panel business was hit especially hard, with revenue down 5 percent year over year. Samsung's flat-panel shipments slumped 31 percent to 8.8 million units during the first quarter. The profit it generated in that operation--100 billion won--was led by improved LED TV sales, which made up 39 percent of the company's flat-panel revenue last quarter.

In the U.S., Samsung continues to find itself in a highly competitive race with Vizio for the lead in the television market. During the fourth quarter of 2010 , the most recent period covered by research firm IHS iSuppli, Vizio shipped nearly 2.9 million televisions, capturing 23.9 percent of the U.S. market. Samsung shipped nearly 2.6 million televisions, helping it nab the second spot with 21.5 percent of the market. In the third quarter, Samsung had led the way with 18.8 percent market share, followed by Vizio's 16.6 percent share.

On the memory side, Samsung said the issues were due mainly to "weak demand for PCs compounded by seasonal factors." It did point out, however, that the memory used in smartphones and tablets during the quarter remained in high demand.

Speaking of the mobile market, Samsung reported that it sold 70 million handsets during the quarter, which was down 14 percent compared to the same period in 2010.

But there was a positive side to the numbers, said Samsung: "Strong sales of smartphones and high-end mobile devices helped to increase Samsung's average sales price and boost operating profit." In addition, smartphones accounted for a growing portion of the company's total handset sales--18 percent in the quarter just ended, compared with 4 percent in the year-ago quarter.

Looking ahead, Samsung sees continued difficulty in the marketplace. The company said that it believes "challenging business conditions will persist in the second quarter," led mainly by "lingering worries over the global economy and tight competition in consumer electronics and mobile businesses."

 

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