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Source: www.asiaecon.org |

SOUTH KOREA: SAMSUNG $682 BILLION OPERATING COST LOSS


South Korea's Samsung Electronics, revealed its first seasonal operating cost loss of $682 billion in the fourth quarter of last year. The figures came as shocking when compared to the $1.78 trillion profits during the same season of the previous year.


South Korea’s Samsung Electronics, revealed its first seasonal operating cost loss of $682 billion in the fourth quarter of last year. The figures came as shocking when compared to the $1.78 trillion profits during the same season of the previous year.

Samsung’s sales plunged due to the decline in demand resulting from the global recession. Both micro chips and LCD television screens were the two hardest hit. Other products also faced a significant fall in sales. The decline in demand has caused prices to fall and sales to plunge leading to a rising loss on Samsung’s accounts.

Even though, Samsung has predicted a significant loss in the coming period due to the global financial climate,  loss was predicted to only be around $425 billion. The increased level of loss is due to a 14% decline in profits resulting from plunging microchips sales which only two years prior to the incident, scored a 31% profit . This 14% decline eventually caused around 60% of thetotal operating cost loss.

Sumsung however, predicts a surplus resulting from higher supply than demand for microchips in the market during the first half of 2009.

Net loss for the company reached $16.6 Billion for the fourth quarter of the past year compared to a net profit of 2.21 rillion Wons in the same quarter of 2007. Profit for the third quarter of 2008 however, was 1.22 trillion Wons. Samsung is considered one of the biggest companies in South Korea with stocks ranging from $48 Billion.

Moreover, The company announced in mid January its plans for organizational restructuring, where it intends to merge four departments into two groups. These plans are intended to minimize the losses amid the current stagnant global economy.

The four departments that were mentioned in the plan are; LCD televisions, semi-conductors, telecommunication, and digital media. Both LCD and semi-conductors departments are to be merged into one group, while telecommunication and digital media into another.

Furthermore, according to the mentioned plan, a wave of lay offs is about to hit the company, as well as a 20% decrease in salaries for VPs and seniors.

As Samsumg – one of the country’s biggest companies- suffers from operating cost losses and layoffs, it becomes   obvious that South Korea is headed for rough economic times.

Source: www.asiaecon.org |


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