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Samsung profit beats forecasts

Company expects third-quarter profit at $3.5 billion, 12% up from second quarter


Samsung Electronics on Friday expected its quarterly profit to exceed market forecasts on the back of brisk smartphone sales and a weak local currency.

The world’s largest technology company said in a statement that profit during the July and September period was estimated to reach 4.2 trillion won ($3.5 billion) after rising 12 percent from the previous quarter. Compared to the same period last year, profit was down 14 percent.

The estimates beat the 3.4 trillion won forecasts issued by analysts here.

Samsung Electronics shares closed at 860,000 won on Friday, up 0.58 percent from the previous day.

The company’s quarterly sales were estimated at 41 trillion won after recording an almost 4 percent increase from the previous quarter and a 1.9 percent rise from the third quarter of last year.

Samsung will be releasing official third-quarter profit figures later this month.

Strong sales of the Galaxy S2 smartphone was seen as the biggest driver of growth, and Samsung is now expected to post record-high handset profit of up to 2 trillion won.

“It seems highly likely for the Galaxy S2 to maintain robust sales, right up to the fourth quarter,” said Ahn Sung-ho, an analyst with Hanwha Securities.

He added that the delayed release of Apple’s iPhone 5 also seemed to have played to Samsung’s advantage.

The semiconductor department was expected to post a profit of 1.5 trillion won to continue as one of Samsung’s mainstay businesses despite the firm’s increasing dependence on telecom.

The liquid crystal display business remained in the red by showing about 200 billion won of deficit.

The upbeat estimate from Samsung prompted sanguine forecasts that the company may beat Apple in the smartphone race.

Samsung sold 19 million smartphones in the second quarter and shipments are expected to have risen to more than 28 million units in the third quarter compared to the 60 million units Samsung is targeting for this year.

In the second quarter, Samsung sold about 1 million fewer smartphones than Apple.

The South Korean firm is now planning to launch its first smartphone based on the latest version of Microsoft’s mobile operating system later this month.

Already, market watchers are issuing forecasts that Samsung will find a new groove in the smart device war following the recent death of Apple’s iconic CEO Steve Jobs.

Last year, Samsung Electronics recorded sales of $130 billion, but analysts had predicted earnings will fall to 3.4 trillion in the fourth quarter on weak market conditions amid a global recession.

“We are considering upgrading our fourth quarter forecasts on the unexpected robust third quarter performance,” said Lee Ga-geun, an analyst with Hana Daetoo Securities.

By Kim Ji-hyun (jemmie@heraldcorp.com)
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