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Samsung DRAM profits lowest in 4 years

by on17 July 2007


Possible hostile take over

Samsung Electronics
has reported its smallest quarterly profit in four years, citing dramatic reductions in computer memory chip prices as the cause. Samsung earned a net profit of $1.55 billion in the second quarter, down 5% from one year ago. The strong DRAM market in 2006 encouraged manufacturers to continue to make the DRAM chips at high productivity levels, despite sluggish demand in 2007, which has contributed to an oversupply and steep price declines, estimated at more than 40%.

The Executive Vice President of Samsung’s investor relations, Chu Woosik, issued a statement that the results for next quarter should be much better, claiming that the market demand for dynamic random access memory (DRAM) chips (used in personal computers) should recover based on normal seasonal demand, along with strong sales of mobile phones and flat screens.

Samsung is considered by many investors to be the most valuable technology company outside of the U.S. and there is growing speculation that Samsung might become the target of a hostile takeover. An unidentified high-ranking Samsung executive apparently has released information that U.S. billionaire investor Carl Icahn and other hedge funds are preparing potential bids for the firm.

Samsung executive dismissed the speculation as idle rumors, but did issue a statement that the company is prepared to counter any such hostile takeover attempts.

Last modified on 17 July 2007
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