Samsung expects profits to double from smartphone boost
Published: 6th Apr 2012 03:08:57
Samsung Electronics has said it expects its profit for the first three months of the year to almost double as its smartphone sales continue to grow.
The company said it expects an operating profit 5.8tn won ($5.1bn; £3.2bn) for the period.
The success of Samsung's Galaxy range has seen it become the world's biggest-selling smartphone maker.
Analysts said the firm had benefited from keeping its margins healthy, despite growing competition.
"There was a big surprise in profit, while revenue was in line, which suggests a stronger-than-expected profit margin from the handset division thanks to robust sales of high-end models like the Galaxy S and Note," said Choi D-Yeon of LIG Investment & Securities.
"Handset margins are estimated to have topped 20% and profits from the division also topped 4tn won."
The company will release its full earnings report on 27 April.
With memory chip prices rising, chips will play a big part in second quarter profits. Expectations for operating profit will reach somewhere between 6.5tn to 7.5tn won”
While Samsung's phone unit has prospered, other divisions, including memory chip manufacturing, have been going through a tough time.
Prices for memory chips have been falling globally, not least due to oversupply.
Analysts said that natural disasters last year in Japan and Thailand had resulted in a fall in production of various electronics products, which use these chips, resulting in high inventory levels putting pressure on prices.
At the same time, slowing demand from key markets such as the US and Europe hurt chipmakers.
However, analysts said that as the global economy recovers and supply chains in the region get back on track, chip prices were likely to recover, boosting Samsung's profits further.
"With memory chip prices rising, chips will play a big part in second quarter profits," said Kim Sung-in, a chip analyst with Kiwoom Securities.
"Expectations for operating profit will reach somewhere between 6.5tn to 7.5tn won."
While the company is expected to grow further, analysts warned that Samsung will have to overcome potential hurdles on the way.
To begin with, it will have to fend off competition from its biggest rival Apple, they said.
"Samsung and Apple are expected to launch the new Galaxy S and iPhone in the second quarter, and they will engage in full-fledged war," said Lee Ka-keun of Hana Daetoo Securities.
The fear is that increased competition may force Samsung to lower its prices in a bid to attract customers, a move which, if implemented, would impact on its profit.
At the same time, Samsung is also involved in a legal battle with Apple over patents involving technology it uses in its smartphones and tablet PCs.
The outcome of those cases will have an impact on its growth going forward.
At 12:01:43 in Northern IrelandA gang of up to eight men have damaged a car in Londonderry in what police have called a "sectarian hate crime".
At 12:01:00 in SportLeicester City manager Nigel Pearson wants his squad to mark their Championship title win by setting a new club record points total.
At 11:56:41 in WalesThe director of care at a children's hospice has been cleared of professional misconduct over the way she dealt with a dying teenager.
At 11:54:04 in ScotlandIntelligence whistleblower Edward Snowden has been installed as rector at Glasgow University.
At 11:54:02 in SportPaul Scholes has returned to help Manchester United's coaching team following the sacking of David Moyes.
At 11:54:01 in WorldA New York police public relations exercise in which members of the public were asked to share photos of themselves positively interacting with police officers has backfired.
At 11:53:19 in ScotlandScottish manufactured export sales fell by 4% in the fourth quarter of last year, according to official figures.
At 11:51:14 in EntertainmentThe number of viewer complaints over the audibility of BBC One drama Jamaica Inn has escalated, with the second episode seeing a decline in ratings.
At 11:51:09 in SportThe International Rules competition between Ireland and Australia has been reduced from two games to one for 2014.
At 11:50:20 in SportMiddlesbrough head coach Aitor Karanka has blamed himself for Tuesday's 2-0 defeat by Reading, the club's second loss in four days.
Harvard CitationBBC News, 2012. Samsung expects profits to double from smartphone boost [Online] (Updated 6th Apr 2012)
Available at: http://www.ukwirednews.com/news/1420976/Samsung-expects-profits-to-double-from-smartphone-boost [Accessed 23rd Apr 2014]
News In Other Categories
An 82-year-old man arrested on suspicion of arson after allegedly crashing his car into a Hampshire sailing club and setting it on fire remains in hospital.
UK property sales were 19% higher in March than the same month a year ago as buyers continued to return to the market, figures show.
A gang of up to eight men have damaged a car in Londonderry in what police have called a "sectarian hate crime".
Eight major renewable energy projects, expected to support 8,500 jobs, have been given government approval.
A meeting to determine how the internet should be governed gets underway in Sao Paulo, Brazil later.
A teenage blogger with terminal cancer is close to raising £1m for charity after posting his final message to followers.