The Korea Herald


Outlook grim for top Korean IT firms

By 김지현

Published : July 25, 2011 - 19:18

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Companies fail to lure customers due to lack of killer products

The nation’s electronics bellwethers are unlikely to give markets the push they need, as they are expected to post lackluster earnings reports for April-June as demand lagged due to a lack of must-have products, industry sources said Monday.

Samsung Electronics, the world’s largest memory-chip maker, recently said in an earnings guidance that its operating profit for the second quarter would reach 3.7 trillion won ($3.4 billion), which is only about a third of Apple’s 9.3 billion for the second quarter.
An employee checks a Samsung Electronics Co. Galaxy smartphone at the company’s Galaxy Zone showroom in Seoul. (Bloomberg) An employee checks a Samsung Electronics Co. Galaxy smartphone at the company’s Galaxy Zone showroom in Seoul. (Bloomberg)

Samsung Electronics is to announce its official figures on Friday.

LG Electronics, which is set to issue its second quarter performance figures on Wednesday, is expected to post an operating profit of around 173.4 billion won at most, according to local brokerages.

LG Display, as expected, last week recorded negative earnings on declining market conditions as liquid crystal display prices fell amid sluggish demand.

The company managed to narrow its operating deficit, but failed to get back into the black.

Hynix, the world’s No.2 memory chip maker, also saw both its sales and operating profit decline.

The dim outlook for IT companies and their shares comes amid speculation that Samsung Electronics will sell more smartphones than its top rival Apple in the second quarter, with No.1 player Nokia already out of the picture.

Analysts point out that traditionally the second quarter is a period of downturn for IT stocks.

“The demand for conventional IT products remains pretty flat, which is why the second quarter results are slipping below par,” said Kang Jung-won, a senior researcher for Daishin Securities.

Other than smart devices, consumers have also lost interest in IT goods.

But part of the blame lies with the companies, as they have failed to roll out must-have products to lure customers, experts said.

However, Kang expected better results for the third quarter, which is usually an up season for IT companies.

“It’s time we saw a pick up in the demand,” he said.

Another analyst also said IT stocks will start to ascend in August.

By Kim Ji-hyun (