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More Telecom Industry suffering the Credit Crunch!! About time to!
South Korea Created: 25 Jan 2009
Samsung reports first-ever quarterly
Samsung Electronics, the South Korean bellwether of the global consumer electronics industry, today reported its first ever quarterly loss.
The company spooked investors across Asia after losing 20 billion won (£10 million) between October and December, due to lacklustre pre-Christmas spending in all key markets.

The company is the world’s biggest maker of LCD panels, televisions and memory chips, and is viewed as having some of the most aggressively managed supply chains in the industry.

Samsung’s results follow a dramatic forecast downgrade yesterday by Sony, its Japanese arch-rival, which said that it was on course to post its first full-year loss this March.

Both companies, in common with the rest of the industry, are suffering massive pain because of the collapse of some of America’s biggest electronics retailers, and consumers' reluctance to spend on "big ticket" items such as televisions.

However, analysts in Seoul said that Samsung’s loss represented a more troubling message from the electronics industry.

Japanese businesses have seen their profits tumble and competitiveness dented by what industry executives are calling the “freakish” recent rise in the yen against all major currencies.

But Korean exporters, which should have benefitted from the historic weakness of the won against the US dollar, do not appear to have done so, indicating that the downturn has had a largely indiscriminate impact on sales and profits.

The failure of Korea Inc to reap greater rewards from the weak won was further highlighted on Thursday when LG Electronics admitted to record quarterly losses.

“The results showed that our company could not escape the rapid decline in the global economy,” said a Samsung spokesman.

As Americans, Europeans and Asians have simultaneously stopped buying large flat-screen televisions and other high-end consumer electronics, inventories of unsold stock have swollen to unprecedented levels.

That, in turn, has triggered a price-cutting frenzy which has carved into margins and further dented the electronics makers’ numbers.

Fighting brutal price wars has been a persistent feature of Samsung’s business model for many years – its competitiveness in memory chips and LCD panels for televisions has caused giant headaches for the likes of Sharp, Toshiba and a variety of Taiwanese semi-conductor giants.

The downturn in Samsung’s semiconductor business was especially bleak, said analysts.

Many believe that chip production has created an oversupply problem that could continue well into next year. Taiwan’s largest chipmakers have been forced to beg for government money to preserve their businesses, while Intel has also hinted that its 21 year run of profitability might be about to end.
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Source: Agnes Ingvarsdottir. www.mast-victims.org

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