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Posted : 2015-09-20 17:02
Updated : 2015-09-20 17:39

Samsung Q3 profit may remain weak

By Kim Yoo-chul

Samsung Electronics is expected to generate below 7 trillion won in quarterly operating profit during the third quarter due to the continued unimpressive performance of its phone business, market analysts said on Sunday.

The median forecast by 22 domestic brokerages for the company's third quarter operating profit was 6.61 trillion won, data from FN Guide, a local financial data provider, showed.

The latest estimate is a 6.39 percent cut from the 7.06 trillion won estimated on July 17.

Samsung Electronics was expected to reap 50.17 trillion won in quarterly sales, with net profit of 5.4 trillion won during the July-September period, a cut of 1.12 percent and 6.65 percent from two months ago, FN Guide said.

Yuanta Securities expected Asia's most prominent consumer electronics company to post a 6.03 trillion won operating profit for the latest quarter. The brokerage believed the rise of budget smartphones would significantly sap demand for value-added Samsung smartphones.

"Operating profit at Samsung's mobile business will remain at 2 trillion won, a decrease of 12 percent from earlier expectations," said Lee Jae-yoon, an analyst at the brokerage, in a note to clients.

"Samsung increased its total smartphone shipments during the third quarter. However, most the shipments were less-pricey and budget phones, hurting its profitability."

Lee's bearish outlook is similar to that of Gartner, a leading research U.S. research company.

Gartner analyst Anshul Gupta said Samsung Electronics would continue to struggle to control its falling smartphone market share after it lost 10 percentage points in the fourth quarter of last year.

Gartner research director Roberta Cozza said, "With Apple dominating the premium phone market and the Chinese vendors increasingly offering quality hardware at lower prices, it is through a solid ecosystem of apps, content and services unique to Samsung devices that Samsung can secure more loyalty and longer-term differentiation at the high end of the market."

KB Securities analyst Lee Ka-keun said the company's display and semiconductor businesses, in which Samsung Electronics had indisputable prowess in the global market, were unlikely to make huge money.

"While the technology industry is seasonally strong ahead of back-to-school seasons in the United States and big holiday shopping periods ahead of year-end, demand for consumer electronic devices remained weak," Lee said.

Hi Investment expects Samsung to exceed 7 trillion won in operating profit for the third quarter.

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