By Kim Tong-hyung
Staff Reporter
Samsung Electronics said Thursday it expects a fourth-quarter operating profit of some 3.7 trillion won (about $3.3 billion), with sales rising 18 percent year-on-year to a record high.
Projections show that Samsung will likely become the first Korean company ever to reach the "100-10 trillion club" ― firms that achieve more than 100 trillion won in revenue and 10 trillion won in operating profit on a yearly basis.
The world's biggest electronics company, which reported an operating loss of 740 billion during the October-December period in 2008, has been proving its mettle amid the economic downturn on the strength of its performance in consumer electronics and mobile phones.
Now, with the markets for memory chips and liquid crystal displays (LCDs) finally coming around, the company seems to be close to firing on all cylinders.
Samsung is the world's leading producer of memory chips, LCDs and flat-screen televisions, and trails only Nokia in handsets.
The company posted sales of 97.5 trillion won and an operating profit of 7.2 trillion won between January and September.
Based on its fourth-quarter predictions, Samsung's operating profit is expected to reach 10.9 trillion won for the whole of 2009, a 90 percent increase from 2008, with sales reaching 136.1 trillion won, up 15 percent from the previous year.
Samsung's estimated fourth-quarter revenue of 39 trillion won represents an 18.2 percent jump from the same period in 2008 and would mark its highest quarterly sales ever, company officials said.
The company plans to make public its fourth-quarter earnings later this month.
Samsung didn't offer an explanation for its strong fourth-quarter performance prediction, but analysts believe it reflects the resurgence of its memory chip business.
Weak demand and deteriorating business conditions in the semiconductor sector, which led to a collapse in memory chip prices, hurt Samsung in late 2008 and early 2009.
However, the recent rebound in memory chip prices, driven by the global economic recovery and increasing demand generated by the sales of computers and other electronics products is now providing the company with an extra jolt.
The global prices for DRAM and NAND flash memory products rose 11 percent and 4 percent, respectively, during the fourth quarter.
Although Samsung is rebounding well from its memory chip woes, maintaining its growth trajectory in consumer electronics, LCDs and handsets look to be a difficult challenge.
Samsung is seeing increased competition in the LCD market from domestic rival, LG Display, and other Asian makers such as Taiwan's AU Optronics and Chi Mei Optoelectronics, and Japan's Sharp.
This has analysts expecting that the company's operating profit from its LCD business will be visibly cut from the 1.1 trillion won it earned during the third quarter.
And though mobile phones were a major driving force for Samsung in 2009, the company has yet to generate a serious buzz when it comes to smartphones, which provide larger margins than conventional handsets.
Although Samsung controls about 21 percent of the global handset market, its share in the smartphone market is less than 4 percent, and none of its premium handsets so far have shown a real ability to compete with either the iPhone or Blackberry.
Samsung is looking to make a splash by launching a slew of data-enabled handsets powered by the Google-backed Android operating system this year.
However, old foe Motorola, which had slipped to No. 5 in the global handset hierarchy, seems to be stealing Samsung's thunder with positive reviews over its recently released Android smartphone, Droid.