Samsung Posts Record Operating Profit Of $5.9 Billion

Samsung Electronics, the world’s top technology firm by revenue, reported on Friday a record profit of $5.9 billion for the June quarter, as rampant sales of its Galaxy S mobile phone helped stretch its lead over Apple Inc.

Samsung April-June operating profit totaled 6.72 trillion won, in line with its guidance issued earlier this month.

Expects third quarter — July-September to be marginally positive as demand for consumer electronic goods, including smartphones and tablets remains strong.

Profit from the telecoms division more than doubled to 4.19 trillion won; semiconductor business showed a small decline in profit to 1.1 trillion won;

Flat screen division swung to a profit of 750 billion won; TV and home appliances business returned 760 billion won.

Commentary

SEO WON-SEOK, Analyst At Korea Investment & Securities:

“Not much bad news around Samsung. Solid results from TV division shows its resilience to euro zone crisis, while mobile division has become a strong cash cow on the back of strong Galaxy sales.

“Weak memory chip prices remain biggest concern for Samsung in the third quarter but it will again fare better than rivals as its reliance on Apple, which tends to squeeze suppliers quite a bit, is small compared to the likes of Hynix and Toshiba. It’ll have less margin pressure.”

SONG MYUNG SUB, Senior Analyst, Hi Investment & Securities:

“Third quarter forecast looks to be better than second quarter results. Other Smartphone makers like RIM and Motorola are not performing well compared to Samsung and iPhone is coming out in October so it will not have much impact on Samsung sales in the third quarter.”

“The expected sales of Galaxy S III this quarter is 6.8 million and for the next quarter we forecast 15 million phones to be sold. Just in this area would bring 8 trillion won sales increase.”

“The chips may fall slightly in the third quarter as Samsung would supply less products. But the increase in demand for its products from Microsoft’s Window 8 release in September and iPhone in October will bring the demand higher than supply.”

“Samsung will show a better performance next quarter in most of it major sectors.”

“Once iPhone 5 comes out more iPhones will be sold as it is the new item and Galaxy S III which by then would have been in the market for a while will show less sales.”

“Samsung’s competitiveness in the market is strong and still the biggest risk for it is just the economic conditions in foreign markets.”

BYUN HAN-JOON, Analyst At Kb Investment & Securities :

“Regardless of Apple’s performance, Samsung will be strong in the third quarter. Actually, for Samsung, Apple’s stumble is a chance.”

“I think sale of Galaxy III is likely to be around 58 million in the current quarter.”

“Relatively, Samsung will keep the momentum in the smartphone market. But when it comes to chip, it’s a different story. As chip market is sensitive to economic conditions, I guess the biggest risk will be weak PC DRAM chip demand.”

HWANG MIN-SEONG, Analyst, Samsung Securities:

“I expect Samsung’s earnings to further rise in the current quarter, but the magnitude will depend on the macroeconomic situation.”

“The IT demand has been exacerbating sharply since June, which should have an impact on third-quarter earnings of technology firms. Sellers are cutting orders and inventories. Samsung will be no exception and will not be free from the economic slowdown, like Apple and other parts suppliers.”

“What differentiates Samsung from competitors is that it has hit products such as Galaxy phones – which is a profit generator. The key to Samsung’s earnings is how many Galaxy phones it sell.”―Money Control

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