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Reports point to a possible takeover at Samsung

Posted: 17 Jul 2007 ?? ?Print Version ?Bookmark and Share

Keywords:Samsung quarterly profit? hostile takeover plans? media reports?

Samsung Electronics Co. Ltd saw its profit decline by 5 percent in Q2 while looming takeover fuelled the company's share price to a 15-month high.

Media reports in Europe and in the United States referred to an article by Chosun Ilbo in which the largest Korean newspaper wrote that U.S. investor Carl Icahn is planning a hostile takeover for Samsung Electronics. The paper points to an unnamed Samsung executive as source.

In Germany, reports quote Samsung investor relations top manager Woosik Chu saying he has no knowledge of such a plan. He added the company had countermeasures in place to fend off such an attempt. No one was available for comment from Samsung's German subsidiary. Nevertheless, the Samsung stock price rose to a new 15-month high of about $280 in early European trade Friday (July 13).

Lackluster figures
The facts as described in Samsung's quarterly report are somewhat sobering, given the earnings decline. In Q2, the company achieved a net income of about $1.54 billion, down 5 percent y-on-y and 11 percent q-on-q, driven down in part by DRAM price decline. Operating profit even declined 36 percent y-on-y and 23 percent q-on-q. Sales, however, rose 4 percent y-on-y to about $15.93 billion.

By product groups, memory sales declined 7 percent (y-on-y as well as q-on-q) to about $3.36 billion while the system LSI business improved 23 percent compared with Q2 '06 and 14 percent against the Q1 '07. However, with a relatively small volume of about $707.85 million, the system LSI business could not prevent that the company's entire semiconductor business declined 5 percent q-on-q to $4.64 billion.

LCD business showed a healthy growth of 17 percent in comparison against the past quarter as well as against the same quarter last year. The company sold LCD screens at a value of about $3.64 billion.

Business with telecommunications equipment declined 5 percent year-on-year to $4.9 billion. Appliances soared 23 percent (y-on-y as well as q-on-q) to $1.03 billion.

Profit trends went to opposite directions for LCDs and semiconductors: While LCD profit exploded by 290 percent compared to last year's quarter, semiconductor profit collapsed by 67 percent in the same period. Recent reports from the semiconductor industry, however, nourish the expectations that the DRAM price has stopped its decline in the meantime.

- Christoph Hammerschmidt
EE Times Europe

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