Samsung’s operating profits fall dramatically
The run of impressive results for technology companies in the first quarter of this year has hit a road bump. Industry giant Samsung has unveiled their results, and they are not pretty. Their operating profit in the quarter fell by 25%. They attribute those unimpressive results to three factors“ the falling price of memory chips, the falling price of mobile phones and increasing strength in the Won, South Korea’s currency. The Won has increased by 5% against the US dollar so far this year, which hurts the South Korean company that relies on exports for more than 80% of their revenue.
Samsung was hit by a world oversupply of Nand flash chips. Prices fell by 25% for the memory chips because of the excess quantities. The company is optimistic that this situation will improve because falling prices should increase demand. The company saw phone profits fall by 10% even though they shipped a record number of phones. This is contrary to results from both Nokia and Sony Ericsson which reported increases in average selling price of phones in the quarter.