Samsung rakes in record profit

The electronics giant sees its quarterly profit triple on roaring demand for chips, cell phones and flat screens.

Samsung Electronics said Friday its quarterly profit almost tripled to a record on roaring demand for its chips, cell phones and flat screens, and the company forecast a solid second quarter.

Samsung, the world's biggest maker of computer memory, benefited from an unexpected spike in prices of chips and booming sales of photo-snapping mobile phones.

The record results followed solid earnings by U.S. chipmakers this week, including a tripling of quarterly profit at Texas Instruments.

Samsung earned $2.72 billion (3.14 trillion won) in net profit for its first quarter that ended March 31. That topped analysts' forecast of $2.6 billion and was up from $976 million in the same quarter a year earlier.

The company is likely to almost double annual net profit to $10 billion in 2004, according to Reuters Research.

"We expect strong second-quarter results on global economic expansion and a stable business structure,'' Samsung said in a statement.

While the outlook for dynamic random access memory (DRAM) chips and mobile phones remains bright, flat display prices may weaken later in the year, analysts have said.

"We think the net profit figure is solid, and its second-quarter profit is expected to be even stronger,'' said Sohn Dong-shik, chief fund management officer and managing director at Mirae Asset Investment and Management. "But we need to be a bit cautious in respect of second-half earnings because prices of DRAM and LCDs may turn downward.''

Prices of DRAM chips, which are used mainly for computer memory, have soared in the first quarter on tight supply as chipmakers switched to making flash memory and hit problems introducing new production technology.

Samsung sold a record 20.1 million cell phones in the first quarter, up from 15.5 million in the fourth quarter. It said sales would rise in the second quarter.

Its record performance contrasts with a downbeat forecast from Nokia. The world's largest mobile phone maker last week trimmed its quarterly earnings forecast and said it had lost market share.

Samsung expects its global market share to rise to around 14 percent in the first quarter, up from last year's 10.5 percent. It said its sales target of 65 million handsets this year looked conservative and will revise the number by the end of the second quarter.

Story Copyright  © 2004 Reuters Limited.  All rights reserved.

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