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Korea's Pantech posts loss in Q2

Posted: 03 Aug 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Pantech? XX? XX? XX? XX?

Affected by aggressive penetration of lower-price products into the global mobile phone markets and a stronger Korean won currency, South Korean handset maker Pantech Co. Ltd reported a loss in Q2 ended June 30.

In a regulatory filing on unaudited earnings results, Pantech said it posted an operating loss of $15.6 million and a net loss of $17.1 million in Q2, compared with Q1's profits of $18.5 million &6.5 million, respectively.

The company's total sales amounted to $297.3 million in the April-June period, down 27 percent from $408 million in Q1 and also a 17 percent decline from $356 million in the corresponding quarter of 2005.

The company added its second-quarter mobile phone shipments by volume totaled 1.7 million units which also declined 28 percent sequentially and 3 percent year-on-year, respectively. Its exports amounted $119 million during the second quarter, compared with $220 million in the previous quarter and $170 million a year ago, according to Pantech.

Pantech, the GSM-enabled handset manufacturing arm under the country's second largest mobile phone maker Pantech Group, said the main culprits behind the tumbles in profitability were strong challenges by market leaders Nokia and Motorola with lower-cost cellphones in overseas markets and the Korean won's appreciation against other major currencies.

During the second quarter, South Korean handset makersSamsung Electronics, LG Electronics as well as Pantechwere battered by falling profitability and neck-and-neck competition at home and abroad. Largely relying on high-end phone models, they have lost market shares to Nokia and Motorola which deliver more affordable handsets at lower prices.

But Pantech expected its stepped-up marketing efforts for new high-end mobile phones in overseas markets, particularly in the United States and other American nations, will help the company see a recovery in both sales and profits in the latter half of this year.

Meanwhile, in a separate regulatory filing, Pantech Group's CDMA arm Pantech & Curitel Communications Inc. also reported a net loss of $33.5 million in the second-quarter, which widened from a loss of $4.3 million a year earlier. The company registered $2.8 million in net profit for the first quarter.

Its second-quarter sales revenue plunged 34.6 percent to $307 million from a year earlier, while operating profits dropped 11.4 percent to $2.1 million, according to Pantech & Curitel.

- Sean Shim
EE Times

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