Samsung Posts First-Ever Loss on Weak Chips

Samsung Electronics posted its first-ever quarterly net and operating losses as its core memory chip and display units battled diving prices, and the technology giant faces yet more pain as the global slowdown saps demand.

The world's top maker of memory chips and liquid crystal displays (LCDs) has been battered by a lengthy downturn in the memory market and a rapid margin drop in flat screens, along with slowing sales of all consumer electronics.

Samsung's chip unit, which just two years ago posted an operating profit margin of 31 percent, reported a loss margin of 14 percent, a much larger deficit than expected. 

The downturn in the memory chip sector, which started in early 2007 with an oversupply and collided with the global recession, is now widely seen as the biggest test the industry has had to face. 

Shares in Samsung, South Korea's biggest company worth around $48 billion, fell 3.47 percent to 445,000 won at 0106 GMT, recovering part of an earlier 4.9 percent fall.

The stock fell more than 16 percent in October-December, but fared better than the wider market's 22 percent drop.

Samsung on Friday posted an October-December net loss of 22.2 billion won ($16.16 million), compared with profits of 2.21 trillion won a year ago and 1.22 trillion won in the previous quarter. 

The figure beat a forecast for a 256 billion won net loss by 11 analysts polled by Reuters, and represents Samsung's first quarterly net loss since it began providing quarterly earnings breakdowns in 2000.

The fourth-quarter operating loss was 937 billion won, showing the impact of ravaged chip and LCD prices. The figure compares to a year-earlier profit of 1.78 trillion won and much steeper than an analyst forecast for a 452 billion won shortfall.

The losses are the first ever since it started to report quarterly figures in 2000.

Sales rose to 18.45 trillion won from 17.48 trillion won a year ago.

Samsung's display division margins fell to a negative 8 percent from the third quarter's 8 percent profit margin and the second quarter's 21 percent profit, underscoring the market's stunning downturn due to oversupply and weak demand.

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Samsung, second only to Nokia in the global handset market, said it sold 22 percent more mobile phones in 2008 than the previous year. It did not disclose its quarterly unit sales for the fourth quarter, after selling a record 51.8 million in the previous quarter. 

Marketing expenses also drove down mobile margins to a meagre 2 percent, from 7 percent in the third quarter.

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