Samsung Electronics’ second quarter profit will fall from the first quarter due to lower than expected shipments of budget phones and tablets, Korean analysts say.
The world’s largest smartphone maker posted an operating profit of 8.49 trillion won ($8.31 billion) and revenue of 58.68 trillion won ($57.47 billion) for the first quarter. Its mobile division contributed a staggering 6.4 trillion won ($6.2 billion) to operating profits.
Profits from semiconductors, displays and home appliances will be better than the first quarter, which is generally the off-season for consumer electronics.
In his recent report, HI Investment & Securities’ Song Myung-seop estimates Samsung’s mobile division will achieve 5.2. trillion won ($5 billion) in operating profit in the second quarter, a decline of 19 percent from quarter one. Total operating profit for the quarter will be 7.9 trillion won ($7.7 billion).
“Though the average sales price of smartphones has risen as the Galaxy S5 started sales, due to the slowdown of low- to mid-end phones total shipments of smartphones will drop 11 percent compared to the first quarter,” wrote Song. “Tablet shipments will also drop to 10 million [units] from the previous quarter’s 13 million.”
In a similar note, I’M Investment & Securities’ Lee Min-hee said Samsung’s smartphone and tablet shipments will decline 9 and 19 percent respectively due to the company’s efforts to strengthen its low- to mid-end line-up while it clears inventory of older models. Lee also said Samsung’s market share drop in China and the overall stagnation of the tablet market were additional causes for the drop.
The analyst said the company’s mobile division will post operating profits of 5.5 trillion won ($5.3 billion) while the total operating profits will be 8.5 trillion won ($8.3 billion), similar to the previous quarter.
Shinyoung Securities’ Lim Dori said the company’s display business will turn to the black while semiconductors and home appliances will perform better, but its mobile division will post an operating profit of 5.7 trillion won ($5.5 billion).
However, results for the third quarter are expected to improve. Once the inventory is cleared and new products are launched, shipments will recover, analysts said. Song estimates that Samsung will post an operating profit of 9.2 trillion won ($9 billion) for the third quarter.
Source: ZDNet Korea (www.zdnet.co.kr)