Samsung Sales to Slow, Company Does the Right Thing

By William Trent, CFA of Stock Market Beat

Samsung posts strong Q4, drops 2007 capex – 1/12/2007 – Electronic News

Samsung has dropped its capex for the coming year. The company said that it has earmarked $8.6 billion (8.1 trillion Korean won) in capital expenditure for 2007, down from the $10.67 billion it laid out for 2006. Samsung was quick to note that though there is a decline, the capex is actually relatively similar to 2006 levels considering advanced spending at the end of 2006, foreign exchange effects, and the spending of $1.7 billion (1.6 trillion Korean won) at Samsung Austin Semiconductor and S-LCD, its joint venture with Sony, in 2007.Samsung further offered a cautious Q1 outlook. “Samsung Electronics anticipates challenges in key product areas in the quarter, a seasonally weak period,” Chu said.

“Key product areas” for Samsung include cel phones, LCD panels and semiconductors – all of which we have warned are in danger of facing inventory gluts. By cutting back the money they will spend on equipment, Samsung is doing the right thing to ease those gluts.

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