Wall Street Beat: Mobile devices, components face economic hurdles

Samsung results are solid but HTC shows weakness as semiconductor sales inch up slowly

By , IDG News Service |  Consumerization of IT

Consumer electronics and related components are facing some serious economic headwinds, according to industry
analysts and financial results from some companies.

With Samsung and HTC reporting results, DRAM sales inching upward and Micron Technologies buying Elpida Memory,
the tech industry's financial spotlight focused on consumer electronics and components this week.

For mobile phones, tablets and other devices, "I think we'll see the growth rate moderate a bit; looking at
consumer electronics we saw sales at about 8 percent in nominal terms last year," noted Shawn DuBravac, chief
economist for the Consumer Electronics Association, on the sidelines of the CEA's midyear line show in New York
last week.

"We'll probably still see single digits this year, lower single digits I think, as some of the real growth
categories -- tablets and smartphones -- recede just a little bit," he said. "They will still be very positive and
will be big drivers for growth this year, just not to the extent that they were last year in terms of pure growth
percentages, and so as the growth slows just a little bit, headline growth slows as well."

Samsung Electronics Thursday announced preliminary results for the quarter ending in June, reporting that
operating profit hit a record 6.7 trillion won (US$4.9 billion), on sales of 47 trillion won. The operating profit
beat the average forecast of 32 analysts' estimates compiled by Bloomberg, which was 6.58 trillion won. Though
Samsung did not provide details, last quarter it said that though there had been a decrease in sales of
semiconductor chips and TVs, an increase in profitability in display panels and mobile phones pushed up quarterly
operating profit margins.

South Korea-based Samsung is riding high on sales of smartphones, experiencing a surge in sales for its Galaxy
family of handsets. For the three months ending in May,
Samsung products topped the U.S. smartphone market
, beating the mighty Apple and accounting for more than a
quarter of all U.S. handset sales.

In the memory market, however, Samsung will get added competition from Micron Technology, which Monday announced
that it would purchase Elpida Memory, the third-largest DRAM maker. Micron will pay $750 million and will also take
over $1.75 billion in Elpida's debt. With the purchase, Micron becomes
a leading supplier
for leading smartphone and tablet makers, including Apple.

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