Samsung & Sony See Weak Demand For HDTVs Despite Q3 Profits

Jonathan Sutton

Samsung and Sony – two consumer electronic giants that rank among the top five TV manufacturers in the world – have voiced concerns about the insipid consumer demand (particularly in the key region of North America) for flat-screen HDTVs, despite both reporting positive third-quarter financial results last week.

While Sony made a convincing return to profit thanks to strong sales of its VAIO laptops and PCs and Playstation 3 (PS3) consoles and games, its TV operations – responsible for making and selling Sony BRAVIA LCD TVs – remained in the red for the sixth consecutive year. However, Sony’s Chief Financial Officer (CFO) Masaru Kato expected the company’s full-year fiscal loss for its TV business to close in on the break-even point, compared to the 73 billion yen (around £566 million) loss incurred during the previous fiscal year.

Revealing that sales of Sony 3D TVs are currently below expectations, Mr Kato said that the Tokyo-based company is maintaining a “cautious” outlook for the remainder of 2010, due to a combination of stalling consumer demand, unfavourable currency swing, and cutthroat competition from rival TV makers.

Samsung, the largest TV maker in the world, largely echoed Sony’s sentiments. The Seoul-based conglomerate announced record third-quarter revenue and profit on the strength of semiconductor chip and mobile phone sales, but saw its LCD panel and flat-screen televisions businesses underperform amid falling demand and prices.

The operating profit margin for Samsung’s LCD division (which supplies LCD screens for HDTVs, laptops, monitors and mobile phones) shrunk to 6.5% in the third quarter, down from 11.3% in the previous quarter. Year-on-year operating profit fell correspondingly by 57% to 520 billion won (around £289 million). Samsung executives blamed sluggish demand for LCD HDTVs (especially in the USA and Europe) and declining average selling prices of consumer electronic items for the weak financial figures in this division.

Samsung’s Digital Media business, which makes a number of electronic devices and appliances including flat-panel televisions, suffered an operating loss of 230 billion won (around £128 million). The company expects a bumpy fourth-quarter as a consequence of Korean won appreciation and diminishing demand for LCD panels.