Samsung Shares Fall on Gloomy Forecast
Oct 7th 2010 2:30AM
Updated Oct 7th 2010 2:37AM
Samsung Electronics, the world's biggest seller of computer memory chips, forecast Thursday that third-quarter operating profit likely eased from the previous quarter's record high amid signs that growth in global demand is waning.
The Suwon, South Korea-based company expects consolidated operating profit of between 4.6 trillion won and 5 trillion won ($4.1 billion to $4.5 billion) for the three months ended Sept. 30, it said in a statement.
That would be higher than the 4.22 trillion won recorded in the third quarter last year but less than the 5.01 trillion won racked up in the second quarter of 2010.
Samsung shares fell 2.5% to 773,000 won, fueling declines in other Asian technology stocks.
The International Monetary Fund on Wednesday cut its forecast for U.S. growth this year and next amid stubbornly high unemployment that is expected to restrain consumer spending. Major economies in Europe are also growing at an anemic pace.
Aside from dominance in chips, Samsung is the world's biggest seller of liquid crystal displays and flat-screen televisions and ranks No. 2 in mobile phone handsets after Finland's Nokia (NOK).
Sales Expected to Rise
Samsung estimated consolidated sales of between 39 trillion won and 41 trillion won for the third quarter. That compares with sales of 35.9 trillion won a year earlier.
The company gave no reason for the expected quarterly results and plans to release details when it formally announces third-quarter earnings at the end of this month, according to spokesman Nam Ki-yung .
Samsung does not release net-profit forecasts. The company recorded net profit of 3.81 trillion won in the third quarter of 2009, according to Nam, a figure he said is based on international financial reporting standards, or IFRS, which the company adopted from the first quarter of this year.
Operating profit is seen as a direct indicator of business performance before taxes, dividends, asset sales and other items that are figured into net profit or loss.
Samsung began issuing earnings estimates, or guidance, last year in hopes increased transparency would help minimize market speculation over its performance. The estimates include the performance of its overseas and domestic subsidiaries.