Second-quarter earnings dropped despite increases in the number of handsets sold, two of the largest phone-makers reported Friday.
Samsung Electronics Co., the No. 3 cell-phone manufacturer, said sales fell 9 percent to $13.1 billion for the quarter, compared with $14.4 billion a year earlier. The company reported a net income of $1.62 billion, down 46 percent from last year’s $3 billion second-quarter profit, despite a 7.5-percent increase in units shipped compared with the same quarter last year.
The news marked the third straight quarterly drop in profits for Asia’s largest technology company by market value and the longest decline in more than three years. While its operating profit was down 23 percent from the first quarter, Samsung’s South Korean credit-card business buoyed the company to the increased net profit. The results were seen as a slight improvement from last quarter’s disappointing results.
Samsung blamed the lackluster numbers on decreasing prices for cell phones and computer memory chips, its two biggest product lines. Last year, prices for those products were at substantially higher levels. Samsung said it sold 49 million phones during the first half of the year.
“Despite the challenging business environment and depressed market conditions, sales remain at similar levels from the prior quarter and operating profit figures met the market’s expectation, demonstrating the inherent strength and competitiveness of Samsung’s business model,” said Dr. Woosik Chu, a Samsung vice president.
Sony Ericsson Mobile Communications L.P., meanwhile, said its profits fell 16 percent during the quarter despite growing sales. The fifth-largest phone maker reported a 14-percent increase in units shipped compared with last year’s figures and said sales rose more than 7 percent to $1.94 billion.
But the joint venture between Sweden’s L.M. Ericsson and Sony Corp. of Japan said its net profit fell to $91 million compared with $107.3 million last year. The company said increased spending in research and development affected the bottom line.
Sony Ericsson said the increased unit sales largely were due to the launch of new phones during the quarter, including the second Walkman-branded handset and a 2-megapixel camera phone. The manufacturer upgraded its market outlook for 2005 to more than 720 million units. “Sony Ericsson is pleased to report a solid second-quarter growth, which saw the company gaining momentum as new products began to ship,” said President Miles Flint, “and the increased investment in product portfolio expansion over the past year started to bear fruit.”
