Corporate earnings drop

by Scott Bicheno

There was mixed news as the
consumer technology industry
announced its first quarter earnings
last month.

Samsung?s profits fell well short of
analysts? expectations, as an annual
drop in sales of 4.2 per cent yielded a
fall in profits of 46 per cent. Samsung
blamed the decline on the strength of
the won against the dollar. Exchange
rates have gone up almost 20 per
cent since the start of the year and
over 80 per cent of its sales are made
overseas.

IBM?s quarter was looking good until
March, when an inability to close latequarter
deals led to a major
disappointment for analysts.
However, it still reported revenues of
$22.9 billion, an improvement of three
per cent on last year.

Philips Electronics has identified
poor semiconductor sales and falling
flat panel TV prices for a 79 per cent
drop in quarterly net profits. The
consumer electronics group posted
earnings of e117million for the
quarter, down from e550m for the
same period a year ago.

Strong sales failed to boost Creative
Technology’s first quarter income. It
recorded sales of $333.8million, up
65.4 per cent on the same quarter
last year. However, net income fell
72.1 per cent year-on-year, from $57m
to $15.9m.

On a brighter note, Intel boasted a
strong first quarter due to higher than
expected mobile processor sales.
Its first quarter revenue of $9.4bn
represented a 17 per cent rise on the
previous year and came in at the highend
of Intel’s mid-quarter forecast
delivered in March.

Net income surged as well, hitting
$2.2bn, 25 per cent higher than the
same period last year.
Things weren?t so good for archrival
AMD, however. It managed sales
of $1.23 billion, but these translated
to an operating loss of $46 million
and a net loss of $17. Robert J. Rivet,
AMD?s chief financial officer, still saw
reason for optimism. "Our
microprocessor business delivered
record sales in what is typically a
seasonally down quarter, driven by
increased sales across all product
categories," he said.

Lastly, Apple posted a record
quarter with a net profit of $290
million. These results compare to a net
profit of $46 million in the same
quarter a year ago. Revenue for the
quarter was $3.24 billion, up 70 per
cent from the year-ago quarter.
Analysts reacted coolly to the news,
however, amid scepticism that these
profits could be maintained.
The overall picture is of an industry
suffering due to price cutting, but still
selling a lot of product.