In light of lower earnings guidance reported compared to the earlier market expectation, the purpose of the information contained below is to provide a brief explanation on the preliminary 3Q earnings forecast to improve investors’ understanding and mitigate the market uncertainties prior to the company’s official announcement of the quarterly earnings results.
Smartphone shipments increased marginally amid intense competition. However, the operating margin declined due to increased marketing expenditure and lowered average selling price (ASP) driven by reduced proportional shipments of high-end models coupled with price decreases for older smartphone models.
For the S.LSI and OLED panel businesses, shipments decreased and profitability weakened due to weaker demand for mobile products.
Under typically weak seasonality, earnings for the CE business declined substantially quarter-on-quarter due to reduced ASP of TV’s and an earlier-than-expected end to the peak summer sales season of home appliance products, such as air conditioners.
Earnings for the memory business improved on-quarter led by continued strong seasonal demand momentum, including PC’s and servers, price stabilization under tight market supply and demand conditions, and cost reduction thanks to improved process migration.
n 4Q 2014, uncertainty of the IM business remains, while the company cautiously expects increased shipments of new smartphones and strong seasonal demand for TV products.
To secure sustainable mid- to long-term growth despite intensified competition, the company is preparing new smartphone lineups featuring new materials and innovative designs, as well as a series of new mid- to low-end smartphones with strong competitive positioning on both hardware specifications and price.
For component businesses, including OLED, the company will continue to enhance competitiveness by continuously strengthening technological innovation and expanding its customer base.
