Samsung, LG Concerned Over External Risks
Rising oil prices, coupled with falling prices of mobile phones, are casting a shadow over the nation’s two electronics giants ― Samsung Electronics and LG Electronics.
According to industry estimates, average selling prices (ASPs) of Samsung phones fell to $153 in the third quarter from $172 a year earlier, while those of LG Electronics also dropped nearly 10 percent to $108 over the same period. ASPs is a key indicator measuring profitability.
Although the Bank of Korea said it is expecting the Korean economy to grow at a slower pace next year due to U.S. credit problems and oil price hikes, the two companies face difficulty in mapping out strategies to counter falling export margins.
``Given the negative risks, we still doubt about achieving our yearly target of 63.6 trillion won in sales,’’ an official from Samsung Electronics said.
``In general, the outlook for the semiconductor industry is uncertain, causing the company to suffer rising expenditure,’’ the official added.
Moreover, Nokia shares are falling owing to tougher competition and falling phone prices, exposing rare vulnerabilities in the seemingly unbeatable handset maker.
The handset market leader expects cell phone ASPs to fall as it targets emerging markets such as China, India and Eastern Europe, where phones sell for less than $50. These regions are crucial for Samsung Electronics to raise its stakes by aggressively selling low-priced phones.
Few phone companies have been willing to wade into the ultra low-end market because profits are precariously thin.
Samsung sold a record number of cell phones in the third quarter. More recently, the company completed its second plant in India while considering producing low-priced phones in Vietnam to narrow the gap with Nokia.
``A good sign is that Samsung is still showing impressive performances in the sale of high-end phones in North America and Europe. To be sure, the falling ASP is a negative factor but we do not worry about that too much as we are the world’s No. 1 in LCD TV and memory sectors,’’ an official from Samsung’s handsets division said.
``We are not considering raising local portions by more than 10 percent in total sales due to the risks,’’ the official added.
LG Electronics, which is somewhat positive about reaping 40 trillion won in total sales on a consolidated basis thanks to strong sales from handsets and information technology-related products, also remains unsure about the industry outlook in 2008.
``Nobody exactly knows when the U.S. credit woes and oil prices will stabilize. That’s why we have to approach it in a rather conservative way in drawing up next year’s plan,’’ an official from LG Electronics said.
source
According to industry estimates, average selling prices (ASPs) of Samsung phones fell to $153 in the third quarter from $172 a year earlier, while those of LG Electronics also dropped nearly 10 percent to $108 over the same period. ASPs is a key indicator measuring profitability.
Although the Bank of Korea said it is expecting the Korean economy to grow at a slower pace next year due to U.S. credit problems and oil price hikes, the two companies face difficulty in mapping out strategies to counter falling export margins.
``Given the negative risks, we still doubt about achieving our yearly target of 63.6 trillion won in sales,’’ an official from Samsung Electronics said.
``In general, the outlook for the semiconductor industry is uncertain, causing the company to suffer rising expenditure,’’ the official added.
Moreover, Nokia shares are falling owing to tougher competition and falling phone prices, exposing rare vulnerabilities in the seemingly unbeatable handset maker.
The handset market leader expects cell phone ASPs to fall as it targets emerging markets such as China, India and Eastern Europe, where phones sell for less than $50. These regions are crucial for Samsung Electronics to raise its stakes by aggressively selling low-priced phones.
Few phone companies have been willing to wade into the ultra low-end market because profits are precariously thin.
Samsung sold a record number of cell phones in the third quarter. More recently, the company completed its second plant in India while considering producing low-priced phones in Vietnam to narrow the gap with Nokia.
``A good sign is that Samsung is still showing impressive performances in the sale of high-end phones in North America and Europe. To be sure, the falling ASP is a negative factor but we do not worry about that too much as we are the world’s No. 1 in LCD TV and memory sectors,’’ an official from Samsung’s handsets division said.
``We are not considering raising local portions by more than 10 percent in total sales due to the risks,’’ the official added.
LG Electronics, which is somewhat positive about reaping 40 trillion won in total sales on a consolidated basis thanks to strong sales from handsets and information technology-related products, also remains unsure about the industry outlook in 2008.
``Nobody exactly knows when the U.S. credit woes and oil prices will stabilize. That’s why we have to approach it in a rather conservative way in drawing up next year’s plan,’’ an official from LG Electronics said.
source
Posts
No comments: