Samsung gets forecast upgrade on back of S7 sales

Analysts are expecting Samsung to ship almost 10 million S7 handsets for the first quarter of the year.
Written by Chris Duckett, Contributor

Early indications of stronger-than-expected sales of new Galaxy S7 smartphones suggest technology giant Samsung Electronics is emerging from a two-year decline at its flagship mobile business.

Squeezed by Apple Inc in premium products and undercut by Chinese rivals like Huawei in cheaper devices, Samsung's smartphone profits and global market share have fallen, sapping momentum at South Korea's most valuable company.

But several brokerages on Wednesday upgraded first-quarter forecasts for what is still the world's top smartphone maker, citing a strong start for the Galaxy S7 and S7 Edge premium phones that were launched earlier this month.

Samsung likely shipped 9.5 million S7 phones in the first quarter, significantly more than the initial estimate of 7 million, Jay Yoo, industry analyst at Korea Investment & Securities, wrote in a report.

"It looks like the sell-in numbers have been pretty good and analysts are raising their sales forecasts for the S7 this year," noted HDC Asset Management fund manager Park Jung-hoon.

"The firm is pushing up volume in the mid-to-low tier to protect market share. Starting S7 sales about a month earlier than the S6 to take advantage of Apple not having new products out yet was also a good move."

Samsung shares gained as much as 2.4 percent on Wednesday to an 18-week high.

The stock is up by more than a fifth since mid-January following a 22 percent slide over the previous three months.

The two Galaxy S7 models have won acclaim for their sleek design and the return of features from previous models such as microSD card storage support and water resistance, though analysts noted the phones offer only incremental upgrades and do not look very different to their predecessors.

In January, Samsung Electronics reported its lowest net profit in four years as its smartphone and semi-conductor core businesses face a slowdown amid weakening global demand for consumer electronics. The company also hinted at a profit decline for the first half of this year.

For the full year, Samsung earned 19.1 trillion won, down 19 percent from the previous year. It was the second year in a row with a decline in annual net income after the company's earnings peaked at 30.5 trillion won in 2013.

Samsung has also recently made the move into the payments space with Samsung Pay. On Tuesday, Samsung launched Samsung Pay in China in alliance with local vendor Union Pay.

The Galaxy S7 and S7 Edge, Galaxy S6 Edge Plus, and Galaxy Note 5 support the service, with Samsung saying more devices will be added in the future.

Samsung Pay enters a battle in China against rivlas that include Apple Pay and Huawei Pay.

With AAP

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