Samsung just released its Q4 2008 results, and as expected the results show how troubled the global markets were in the Christmas quarter. Sony gave the markets a stark warning when it yesterday released revised forecasts, indicating an operating loss of JPY 250 billion (EUR 2.2 billion) for the financial year ending in March. In our comment on Samsung's Q3 2008 results we pointed out that the industry would head into tough times this Christmas, and the results are now coming in.
We were therefore not surprised to see Samsung report struggling quarterly earnings, where all business divisions aside from Telecom, posted operating losses. Operating losses were due to severe price decline globally as well as a spike in marketing spend in the Christmas quarter that did not materialise into higher ASP and profits.
The bleak results come off the back of the big corporate restructuring that Samsung initiated last Wednesday. Samsung fired many of its most senior executives in an attempt to breath new life and energy into the company. It is also merging its fab capabilities (LCD & Semiconductors) and it is merging Telecom & Digital Media into one division. It is our understanding that these new divisions will operate independently of each other.
However, Samsung faces many challenges for 2009 and onwards.
1. How will Samsung position its mobile phone products in the ongoing mobile phone operating system battle?
2. How will Samsung create a coherent consumer software, content and services strategy for its products?
3. How will Samsung change its product development process as it enters the market for connected electronics where life cycle management of product platforms will drive for change in the company?
The electronics giant's results were grim, but given the market conditions they were hardly surprising. Samsung can play to many strengths, but its management team has many challenges to deal with going into 2009, such as restructuring, cost management, and aligning products with software, content and services.
