Samsung’s profits fell 26% during the second quarter due to poor sales in its LCD display division, according to a report the company released today. The firm’s operating profits were $3.5 billion for the quarter, down from $4.7 billion from the same period last year. According to a survey from Bloomberg that included six analysts, the Korean company’s display arm is expected to post an operating loss of 3.5 billion won ($69 million), down from an 880 billion won ($827.2 million) profit during the second quarter of 2010. Earlier this week, the head of Samsung’s combined LCD and semiconductor business, Kwon Oh-hyun, confirmed that Samsung’s component sales would suffer during the second quarter. That business could suffer more as Samsung continues to fight multiple lawsuits with its largest LCD buyer, Apple, and rumors have suggested the iPhone builder could drop Samsung as a supplier. “Only the phone business is holding up,” Kim Sung In, an analyst with Kiwoom Securities Co. told Bloomberg. “Everything else is looking bad. There’s no bright picture for the company looking ahead.” More →
Last week, Samsung announced that it will combine its LCD and semiconductor businesses. The move is expected to conceal poor LCD sales, but the head of the new combined business, Kwon Oh-hyun, has said that he expects the overall performance to falter during the second half of the year. “In the past, the semiconductor market tended to be weaker in the first half and stronger in the second half, but for this year, it is likely to remain flat throughout the latter half,” Kwon said according to The Wall Street Journal. Samsung typically sees 70% of its operating profits and 44% of its revenues from the combined sales of its semiconductor and LCD products. The South Korean firm is currently locked up in multiple legal battles with Apple — the largest buyer of its LCD products — and rumor has it the Cupertino-based firm is considering dropping Samsung as a supplier.
Samsung will combine both its flat-panel display and semiconductor businesses into one unit, The Wall Street Journal reported on Friday. Samsung’s display business wasn’t profitable during the first quarter and it’s on track for the same lackluster performance during the second quarter. Combined, however, the display and semiconductor businesses made up 70% of Samsung’s operating profits and 44% of the South Korean company’s revenue, The Wall Street Journal said. In other words, the move looks like an attempt to shroud the poor display performance inside the company’s more successful semiconductor unit. The display unit could see more trouble ahead as well, since Samsung is currently locked in a number of legal battles with Apple, the largest buyer of Samsung’s LCD products. Kwon Oh-hyun, Samsung’s semiconductor president, will oversee the new joint businesses.