Samsung Electronics 'ripe' for takeover

Speculation rife as profit margins hit four-year low

Simon Burns in Taipei, vnunet.com 16 Jul 2007

Samsung Electronics has reported profit margins at a four-year low in the traditionally weak second quarter, despite maintaining its lead in the TV market.

The 36 per cent dip in operating profit to 0.9 per cent has sparked renewed speculation in Korea that the company could be the target of a takeover bid.

Falling DRam memory chip prices were one of the key factors behind the weakened profit figures, according to analysts in Seoul. Samsung is among the world's largest manufacturers of DRam, Flash memory and LCD displays.

The most recent display market data from research firm iSuppli shows Samsung with an 11.6 per cent share of global TV sales in the first quarter, slightly ahead of local rival LG Philips.

Samsung's share of the LCD TV segment was even greater, at almost 17 per cent. The company's LCD unit recorded a second quarter operating profit of $315m.

Profits from LCDs and mobile phones helped in part to balance out the losses from the semiconductor division. Total operating profit at Samsung Electronics was $992m on net income of $1.5bn.

The weaker operating profits fuelled speculation among Korean investors that the electronics unit of the Samsung conglomerate could be the target of a hostile bid.

Share prices rose on these rumours, the JoongAng Daily reported, and US investor Carl Icahn was named as a possible source of a takeover bid by local media, although no source was given for this speculation.

A Samsung Electronics spokesperson told Korean media that the company had already implemented unspecified "defence measures" to counter any hostile takeover attempt.

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