Samsung Electronics posted its first ever quarterly loss as its memory chip and display units buckled under the weight of diving prices, and the technology giant faces even more pain as global recession saps demand. Profits at the world's top maker of memory chips and liquid crystal displays (LCDs) have been mauled by a lengthy downturn in the memory market and a rapid drop in margins for flat screens, along with slowing sales of all consumer electronics.
“It's a big earnings shock, boding ill for other high-tech players around the world,” said Lee Jeong, an analyst at Hana Daetoo Securities. Peter Yu, analyst at BNP Paribas in Seoul, predicted the current first quarter would be even worse.
“Across the board, every major business is going to show quarter-on-quarter deterioration. At the moment, the visibility of a turnaround is very low,” he said. Samsung posted an October-December operating loss of 937 billion won ($682 million), showing the impact of ravaged chip and LCD prices.
The figure compares to a year-earlier profit of 1.78 trillion won and was much steeper than analysts' forecast for a 452 billion won shortfall. Samsung's chip unit, which just two years ago posted an operating profit margin of 31 per cent, reported a loss margin of 14 per cent, a much larger deficit than expected.
