[December 08, 2008] CORRECTED-UPDATE 2-Samsung executive sees tough times, cuts in capex Tweet SAN FRANCISCO, Dec 09, 2008 (Reuters via COMTEX) -- Samsung Electronics Co Ltd said on Monday it was cutting its targets for sales, capital expenditures and profit, reflecting an increasingly tough worldwide economy. Chu Woo-sik, the Korean electronics giant's executive vice president in charge of investor relations, said at an investor conference that capital expenditures will drop from 10 trillion won ($6.91 billion) this year to a range of 7 trillion won ($4.84 billion) to 8 trillion won ($5.53 billion) next year. But he said the company was still determining the amount and it was subject to change. The world's top maker of memory chips and liquid crystal displays (LCDs) is facing a lengthy downturn in the once-reliable memory market and a rapid margin deterioration in the flat-screen sector, along with slowing sales of consumer electronics in general. Chu, who spoke to investors and then amplified his remarks at a news conference, said demand will weaken in 2009 and profitability now is deteriorating "pretty fast" in some key areas. He characterized flat-screen televisions as a commodity, but said the company had more of an advantage in memory chips, where it was able to differentiate itself. Still, he predicted price declines for widely used DRAM chips, and said the company's target had dropped from 100 percent unit growth to 90 percent for the current year. Chu said weak demand had led to fierce price cuts in large-screen televisions, causing profits to "vaporize." Over the longer term he was optimistic, because he said only 15 to 20 percent of televisions were digital. Analysts at the conference expressed little surprise. "It was widely expected, there was nothing too new," said C.L. Muse of Barclays Capital. He said the company admitted its problems and then chose to focus on what would be happening later, especially in chips. WELL POSITIONED "You can point to a growth trajectory over the next three to five years and Samsung is well positioned to benefit from that," he said. Another analyst, who asked not to be quoted by name, said he was "encouraged by the acknowledgment of the macro demand slowdown and the need to preserve cash." But the second analyst said, "I wish there had been a little more specificity. There were really no numbers." Others reflected disappointment with the lack of specifics. Chu said that others were feeling even more pain than Samsung, and that his company's market share was growing in such areas as telephone handsets. "We are pretty confident we will be coming out of this long and dark tunnel a leaner and meaner animal," Chu said. For the longer term, Souk JunHyung, who leads the display research and development center, predicted "ultra definition" television, two steps beyond high definition, by 2015. He said screens will have much higher resolution than HD, refresh more often and be as large as 82 inches. Samsung's third-quarter results beat estimates in late October thanks to decent margins in chips and a weak won , but the company faces a grim future as the global economic crisis is set to pressure demand. Operating margins at Samsung's semiconductor unit fell to 5 percent in the third quarter compared with 6 percent in the second quarter and 18 percent a year ago. The memory sector, mired in a severe downturn that started in early 2007, is not expecting a recovery before the second quarter of 2009 at the earliest. Chu said he personally believes that other countries should not be giving aid to their troubled electronics companies. He said his company has received no government help. $1 = 1,447 won (Reporting by David Lawsky; Editing by Matthew Lewis, Gary Hill) Keywords: SAMSUNG/CHU ([email protected]; + 1 415 677 2505; Reuters Messaging [email protected]) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. MMMM [ Back To TMCnet.com's Homepage ]