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HindustanTimes Thu,21 Aug 2014

Business

Samsung expects Q2 handset earnings to beat Q1
Reuters
June 25, 2012
First Published: 14:29 IST(25/6/2012)
Last Updated: 12:05 IST(26/6/2012)
The Samsung Galaxy S III flagship smartphone. Photo: AFP

Samsung Electronics Co expects sales of its new Galaxy S III, launched at the end of last month as a main rival to Apple's iPhone, to top 10 million during July, making it the South Korean group's fastest selling smartphone.

It also predicted earnings from its handset division would be higher in the current second quarter than in January-March, countering market concerns that tight supplies of the new Galaxy model and the weak global economy would pressure earnings at Asia's most valuable technology firm.

Shares in Samsung dropped more than 4 percent on Monday to a four-and-a-half month low, after more brokers cut their quarterly profit outlook, citing concerns over its chip and telecoms businesses. The benchmark KOSPI <.KS11> stock index was down 1.6 percent.

"The overall market condition was challenging due to euro zone issues and tight supply of components ... but (our) second-quarter results will be better than the first quarter," JK Shin, head of Samsung's mobile division, told reporters.

Profit from Samsung's mobile division nearly trebled in January-March to $3.6 billion, accounting for 73 percent of group operating profit.

Samsung kicked off global sales of its Galaxy S III on May 29, but shipments have been affected by the tight supply of parts such as the handset casing for the pebble-blue model.

"Supply remains very tight due to strong demand and component shortages, but we expect overall supply conditions to improve from next week," Shin said.

Samsung said in late April that new Galaxy smartphones would "substantially contribute" to second-quarter results.

Analysts have downgraded estimates for Samsung's second-quarter smartphone shipments in recent weeks, predicting that sales of the latest Galaxy model have triggered a steeper than expected drop-off in sales of earlier products. They also cited tight supply of the S III model and growing competition from low-end manufacturers such as Huawei Technologies and ZTE Corp <0763.HK> <000063.SZ>.

JPMorgan cut its forecast for Samsung's second-quarter smartphone shipments by a tenth to 50 million units.

Samsung sold 44.5 million smartphones in January-March - equal to nearly 21,000 every hour - giving it 30.6 percent market share. Apple sold 35.1 million iPhones, taking 24.1 percent market share.

Samsung introduced its first Galaxy in 2010, three years after the iPhone's debut, to counter Apple's roaring success in smartphones and take advantage of stumbles at bigger rivals Nokia and BlackBerry maker Research In Motion .


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