UPDATE 2-Samsung Elec sees higher profit, cuts sales fcast

viernes 28 de marzo de 2008 04:31 CET

  (Adds more quotes, analyst comments, updates share prices)
 By Rhee So-eui and Marie-France Han
 SEOUL, March 28 (Reuters) - South Korea's Samsung
Electronics (005930.KS: Cotización), the world's biggest maker of memory
chips and TVs, cut its target for 2008 sales and issued a
modest forecast for earnings growth in what it called a
difficult global environment.
 The lower target for 10 percent sales growth, which
undershot most brokerage forecasts, underscores the Asian
technology giant's cautious stance in the face of a slowing
world economy and an ongoing investigation into the parent
group's alleged slush fund, analysts said.
 Analysts said strong demand for mobile phones and liquid
crystal displays (LCD) is likely to help it exceed its target.
Samsung shares rose, outperforming the market.
 "Samsung can easily post 20 percent growth in total revenue
given that it should achieve very strong gains from LCD and
handsets," said Song Myung-sup, an analyst at CJ Investment &
 "The 10 percent growth forecast marks the absolute minimum
level the company aims to achieve."
 Shares in Samsung, the country's largest company with $91
billion in market value, rose 1.49 percent to 614,000 won at
0244 GMT, in line with a rising technology sector on
expectations that mobile phones and LCD sales will boost first
quarter earnings. The KOSPI index .KS11 rose 1 percent.
 "We are aiming to post a sales increase of more than 10
percent than in 2007," Samsung Electronics Chief Executive Yun
Jong-yong said at the company's annual shareholder meeting on
Friday. The new target is lower than a January company forecast
for 15 percent growth.
 "We will focus on high value businesses and aim to post a
net profit higher than 2007's," Yun also said, adding that the
2008 targets have not been finalised.
 In 2007 Samsung posted net profit of 7.43 trillion won
($7.53 billion) on sales of 63.18 trillion won on a parent
basis. Sales grew 7 percent in 2007.
 Analysts surveyed by Reuters Estimates forecast Samsung to
earn 9.04 trillion won in net profit this year on 72.24
trillion won in sales -- a 22 percent and 14 percent growth
 Samsung's memory chip business, once a cash cow, is
grappling with extremely difficult market conditions because of
oversupply and collapsing prices in dynamic random access
memory (DRAM) used in personal computers.
 The sector's profitability has been compounded by steep
price falls in NAND flash chips, used in portable electronics.
 But Samsung's liquid crystal display (LCD) business is set
to enjoy a strong year with solid demand for flat-screen TVs
and tight supplies.
 Its mobile phone business, the world's second-biggest, is
expected to grow on strong demand from emerging markets and
outshine rivals Motorola MOT.N and Sony Ericsson (ERICb.ST: Cotización)
(6758.T: Cotización).
 The recent weakness in the won KRW= currency, which helps
exporters like Samsung price their goods competitively
overseas, adds to the optimism about Samsung's business.
 "If the won remains weak, Samsung is likely to show much
better results than today's sales forecast", said Kim
Hyun-joong, an analyst at Tong Yang Investment Bank.
 "Global economic growth is expected to slow this year," Yun
said, citing high oil and raw materials prices and global
financial markets rendered unstable by the dollar's weakness.
 "We aim to continue posting high profits from our four
strategic businesses -- memory chips, LCD, mobile phones and TV
-- by being the first ones to enter next-generation markets and
differentiating our products."
 Yun remained cautious about the handset market. "The mobile
phone industry could see a radical change in the competition
landscape due to Motorola's restructuring."
 He added Samsung is also working to become a leader in the
growing markets for next-generation storage devices and mobile
 Outside its business, Samsung Electronics faces a tougher
situation. It has said key executive decisions regarding the
company had been delayed pending an investigation into the
parent Samsung Group's [SAGR.UL] alleged slush funds.
 South Korea in January launched a special probe after a
former legal executive said Samsung kept a slush fund in
accounts set up in its executives' names to pay off officials
and squash probes into its management practices.
 Samsung has denied any wrongdoing and called the
accusations groundless.
 ($1=987.2 WON)
 (Additional reporting by Park Ju-min, editing by Louise