KT Corp. fourth-quarter profit misses estimates on costs for smartphones

Bloomberg | January 27, 2011 | Jun Yang

KT Corp., South Korea’s largest phone and Internet company, reported fourth-quarter profit that missed analysts’ estimates after marketing and smartphone costs increased.
Fourth-quarter net income was 105.1 billion won ($95 million), compared with a loss of 430.5 billion won a year earlier, the Seongnam, South Korea-based company said in a statement today. That lags behind the 199.2 billion won average of 11 analyst estimates compiled by Bloomberg. Sales increased 9.3 percent to 5.19 trillion won.
Costs of goods sold increased 49 percent and marketing expenses rose 2.3 percent as the company spent more on sales promotions to lure customers in one of the most saturated wireless markets in the world. Profit may gain in the current quarter, helped by surging demand for smartphones and tablet computers, according to Ahn Jae Min, an analyst at Kiwoom Securities Co. in Seoul.
“In the fourth quarter, a lot of costs occurred,” Ahn said before today’s announcement. “Earnings will improve in the first quarter. Smartphones will be mainstream this year, and additionally, there are tablet computers.”
Operating profit, or sales minus the cost of goods sold and administrative expenses, was 304.7 billion won, compared with a loss of 549.5 billion won a year earlier. KT is the exclusive provider of Apple Inc.’s iPhone and iPad in South Korea.
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