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Earnings: Samsung Swings To First Ever Quarterly Loss; Handset Sales Weaken

imageSamsung swung to a fourth quarter net loss of 22.2 billion won ($16.2 million), on the back of plunging sales in memory chips, LCDs and appliances. The first ever quarterly loss for the South Korean electronics giant was a far cry from the 2.21 trillion won ($1.59 billion) profit it made the same period last year, and 1.22 trillion won ($863 million) in the third quarter. Operating loss came in at 937.1 billion won ($674 million), more than double the 413 billion won ($297 million) operating loss a Bloomberg survey of analysts had estimated. Income from its telecommunications unit, which includes network infrastructure sales and handsets, plunged 73 percent to 160 billion won ($115 million), less than half of the Bloomberg analyst estimate of 348 billion won ($250 million).

Earnings Highlights:

Handset sales: Samsung shipped 52.8 million handsets in the fourth quarter, a 14 percent rise from the same period last year, and a 2 percent increase from the third quarter. The company missed its own internal goal of 200 million handset sales for the full year, the total of which came in at 196.6 million units. Samsung blamed weakening consumer demand. In developed markets, Christmas sales did not deliver, while in emerging markets, credit issues among retailers hindered sales

Strongest selling phones: Touch screen models (F480) and the Omnia smartphone (pictured right) did well in developed markets, while mid-end camera phones (J700, E250) were sought after in emerging markets.

Average Selling Price (ASP): Average selling price came it at $121, down 10 percent from the third quarter, hit by increased competition in its foreign markets, and a slow down in sales in its domestic markets.

Market Outlook: Samsung expects the market for handsets in 2009 to contract by 5-10 percent, with no relief coming from emerging markets. It expects Q1 to be badly hit, with growth set to decline 10-15 percent year on year.

Earnings Report | Conference Call