SAN JOSE, Calif. - Amid a plan to raise its capital spending in 2011, Samsung Electronics Co. Ltd. announced revenues of 41.87 trillion won ($37.7 billion) on a consolidated basis for the fourth quarter ended Dec. 31, 2010, a 7 percent increase year-on-year.
For the quarter, the company posted consolidated net income of 3.42 trillion won ($3.1 billion, a 13 percent increase year-on-year. Consolidated operating profit for the quarter was 3.01 trillion won ($2.7 billion).
South Korea's Samsung beat its own estimates. In its earnings guidance disclosed on Jan. 7, Samsung estimated fourth-quarter consolidated revenues would reach approximately 41 trillion won ($36.8 billion) with an operating profit of 3 trillion won ($2.69 billion).
The fourth quarter results brought Samsung’s full year 2010 revenue to an all-time high of 154.63 trillion won ($138.8 billion), up 13 percent from last year. Net income reached a record high of 16.15 trillion won ($14.4 billion), up 65 percent compared with the previous year.
''Samsung’s performance in the fourth quarter continued to be driven by memory semiconductors and strong sales of its cutting-edge smartphones. On a quarter-on-quarter basis, however, profit margins decreased primarily due to weakening pricing for memory semiconductors and LCD panels, as well as price competition in the TV market,'' according to Samsung.
Capital expenditure on a consolidated basis reached 21.6 trillion won ($19.4 billion) for the entire year of 2010, including 12.7 trillion won ($11.4 billion) for the semiconductor business and 4.6 trillion won ($4.1 billion) for the LCD business.
In 2011, capex is expected to reach 23 trillion won ($20.7 billion. As was announced in early January, 10.3 trillion won ($9.2 billion) will be invested in the semiconductor business, including 5.8 trillion ($5.2 billion) in memory and 4.2 trillion ($3.77 billion) in system LSI. A further 4.1 trillion won ($3.68 billion) is allocated for the LCD business, as well as 5.4 trillion won ($4.85 billion) for subsidiary Samsung Mobile Display.
Samsung’s semiconductor business recorded a consolidated basis operating profit of 1.80 trillion won ($1.6 billion) in the fourth quarter. Revenue reached 9.25 trillion won ($8.3 billion), a 16 percent increase year-on-year. For the full year 2010, the semiconductor business registered 10.11 trillion won ($9.08 billion) in operating profit on revenue of 37.64 trillion won ($33.8 billion), a record-high.
''Despite a weakening market trend, Samsung secured profitability by increasing the portion of high-margin products such as server and mobile DRAM, as well as by strengthening its market position with increased production of 40nm-class processes and below,'' according to Samsung.
''While the global DRAM market suffered from falling prices and weakening PC DRAM demand, NAND chips did well with help from surging demand for smartphones and tablet PCs. Samsung’s market differentiation strategy in the NAND sector was to expand production of 30nm-class processes and below,'' according to the company. '''The DRAM market is forecast to improve in the second half of the year driven by growth in PC replacement demand from businesses.''
Sales for the LCD business were down 1 percent from a year ago as increasing shipments could not offset price falls. Overall unit sales for the period increased more than 10 percent quarter-on-quarter.
Average industry sales prices retreated across all segments in the fourth quarter. The average price for TV panels dropped 12 percent, with prices for monitor panels dipping 5 percent and notebook PC panels falling 3 percent. Samsung forecasted LCD panel prices will remain low in the first quarter of 2011 due to supply outpacing demand.
Samsung’s telecommunications businesses – Mobile Communications and Telecommunications Systems – was up 38 percent in terms of sales year-on-year. Samsung’s mobile device sales reached 80.7 million units for the quarter, up 17 percent year-on-year. This brought total sales for the year to 280 million units, registering growth of 23 percent and outperforming the overall market.
While mobile device sales are expected to contract slightly in the first quarter of 2011 due to weak seasonal demand, Samsung forecast high single-digit sales growth for the year overall, driven by the fast-expanding smartphone and tablet segments. With its growing lineup, the company is targeting smartphone sales of 60 million units for the year, double that of 2010.
Samsung shipped 12.72 million flat panel TVs in the fourth quarter, a 40 percent jump compared with the previous quarter and a 17 percent on-year increase. Market demand for LED TVs is forecast to rise further, with the portion of LED models in the overall LCD segment expected to reach 51 percent this year.
In 2011, market demand for flat panel TVs is forecast to increase 11 percent, helped by strong emerging market sales.