Samsung Electronics today estimated that its Q3 operating profit grew 12 percent as compared with three months earlier.
On Friday, the South Korean firm estimated its operating profit for the third quarter at 4.2 trillion won ($3.5 billion) versus a consensus forecast of 3.4 trillion won by analysts surveyed by Thomson Reuters. That was down 14 percent from a year ago but up 12 percent from the preceding quarter.The profit estimate was higher than the most bullish street estimate of 3.95 trillion won.
“Samsung’s estimates are far better than expected. Its telecommunications business is seen very positive as shipments of smartphones and other high-end handsets expanded,” said Park Jong-min, a fund manager at ING Investment Management.
Investors are looking for signs its telecom business can sustain strong growth in the year-end holiday season as its flagship Galaxy line of smartphones and tablets square off against Apple’s new iPhone going on sale next week.
Samsung is expected to report record profit from handset sales and overtake Apple as the world’s biggest smartphone vendor in unit terms in the third quarter. It sold about 1 million fewer smartphones than Apple in the second quarter.
Profit from Samsung’s telecoms division is widely expected to top earnings from the semiconductor business at the world’s biggest memory chip maker.
Analysts say Samsung is one of the best placed firms to deliver something fresh and exciting to rival Apple. It already makes the closest competitor by sales to Apple’s iPad tablet.
“The Galaxy S2 probably played a key role in boosting the company’s earnings and it will continue to do so pretty much unchallenged, until Apple unveils a better version of next new iPhone,” said Kyung Woo-hyun, a fund manager at Daishin Asset Management.
Smartphones may now account for one-third of Samsung’s handset portfolio, up from 26 percent in the second quarter and 12 percent a year ago, lifting the profit margin of its overall handset business to around 14 percent, analysts said.
“I am very surprised at the (profit) numbers. I am guessing either a particular lineup of products with higher margins sold well, or cost cutting measures were aggressively implemented,” said James Song, an analyst at HI Investment & Securities.
MIND BLOWING SAMSUNG…U R THE NO.1