Samsung Q3 profits to plummet: Korean analysts

Samsung Q3 profits to plummet: Korean analysts

Summary: South Korean analysts are lowering their expectations for Samsung's third-quarter profit due to continuing tough external market environments, reports ZDNet Korea's Cho Mu-hyun.

TOPICS: Samsung, Korea

Multiple Korean securities firms published reports on Tuesday expecting a hefty profit drop from Samsung's IT and mobile division for the period.

They cited lowered average sales price (ASP) from heated competition, absence of flagship phones during the quarter, and consumers waiting for Apple's iPhone 6 as some of the causes. Some have expected profits to drop near 40 percent from the previous year.

"Due to decreases in ASP and margin rates, profits from IT and mobile division will be lower than previous expectations, while emptying inventories of AMOLED [active-matrix organic light-emitting diode] for smartphones will cause its display division to post losses," said Song Myung-sup, an analyst at HI Investment & Securities.

Smartphone shipments will rise from the previous quarter, but absence of a flagship model during the quarter means more will be spent on marketing, which will eat away profits, the analyst said.

Song lowered the operating profit estimate to 6.1 trillion won ($5.9 billion) from his previous 7.3 trillion won ($7.1 billion).

Woori Investment & Securities analyst Lee Sae-chul shared the sentiment, and expected the Korean tech giant to post operating profits of 6 trillion won ($5.8 billion).

"Heated competition from Chinese players, such as Xiomi, and the market's high expectations for Apple's new product will continue to weaken [Samsung's] smartphone profits in the second quarter," said Lee in his report.

Samsung Electronics posted operating profits of 10.16 trillion won ($9.97 billion) last year in the third quarter, its highest ever, but new estimates by securities firms means this can drop by as much as 40 percent this year.

As of Monday, according to FnGuide, a local financial information agency, the combined average estimate of Korean security firms for the electronics giant's operating profit for the third quarter was 7.44 trillion won ($7.31 billion), a drop of 26 percent year on year.


Topics: Samsung, Korea

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  • mobile first!

    Is seems mobile first is not the way to go! Dropping focus on the PC may have been a mistake as they could have been more innovative with a product that have more of a shelf life than mobile devices. You can only fit so much into a phone and the only innovation left is finding a new form factor. Same is true for tablets. Apple can't innovate any more so adding a large screen is all that it can do. Tables are in the same bucket all are trying to end up back to where the PC era (keyboard and mouse) what a waste of energy and time to focus on mobile. However it did make Intel wake up and start producing better performing chips along with better battery life which afforded the Surface Pro 3 to end up so light, thin and powerful. This is were the innovation is not in mobile OS.
  • No duopolies, thanks!

    I want choice an not to be forced to buy one of two brands. Good that Samsung is losing ground, time for Apple to follow them to the bottom...
  • Why pay Samsung premium...

    Or really anyone's premium prices. Mobile devices have become a commodity and there is simply little reason to pay $600+ for a phone or tablet anymore. Its not just Samsung, I simply find it absurd that people still are buying iOS products at ridiculous rates.
    Rann Xeroxx
    • Apple is a religion...

      While Samsung users can easily be convinced to switch brand (I just did that...), Apple cultists would never ever even consider it. To them commodity is a bad word. They think that displaying the Apple logo on any device magically makes them cool and better than the rest of humanity and would pay any price for that...
  • Hard to trust an analyst who can't spell Xiaomi

    Seriously, this is the guys full time job and he doesn't know the name of arguably the fastest growing company in the entire industry?