Samsung tips record-high profit for 2nd quarter
SEOUL, South Korea (AP) — Smartphones powered Samsung Electronics Co. to record quarterly earnings, but its shares fell Friday as lower-than-expected overall sales underlined the threat from Europe's economic malaise.
The world's largest maker of memory chips, mobile phones and flat-screen panels estimated its second-quarter operating profit at between 6.5 trillion won and 6.9 trillion won ($5.7 billion and $6.1 billion), a 79 percent jump from a year earlier based on the midpoint of that range. It will release a detailed earnings report later this month.
Analysts said the sharp rise in operating profit was driven by Galaxy smartphone sales. Although Samsung did not break out figures for each division, analysts believe about 4.4 trillion won of its second-quarter profit is from its mobile communications division, accounting for about 65 percent of its operating earnings. The preliminary profit met expectations and beats Samsung's previous record of 5.85 trillion won profit, reported in the first quarter of 2012.
But the South Korean company's guidance for second quarter revenue of between 46 trillion won and 48 trillion won was below the average market forecast of around 50 trillion won. Samsung shares closed 2 percent lower in Seoul. The broader Kospi benchmark fell 0.9 percent.
The revenue figure "means that global demand for information and technology products during the second quarter was weaker than expected," said Song Myung-sub, an analyst at Hi Investment and Securities.
The chronic European debt crisis is taking a toll on demand in Europe, North America and China, which are key markets for manufacturers of personal computers, televisions, mobile phones and home appliances. Consumers and PC and TV makers are primary revenue sources for Samsung, which supplies chips and flat-screen panels for global PC and TV makers, in addition to selling its own finished products.
The global television market shrank from a year earlier during the first half of this year, Yoon Boo-keun, president of Samsung's television and home appliance division, said at a media event Wednesday. The company is preparing for a possible crisis with a contingency scenario for each region, Yoon said.
Growth in the mobile phone industry's handset shipments this year will be the slowest in three years at just 4 percent because of uncertain economic conditions, market researcher International Data Corp. said last month.
Analysts including Lee Sun-tae at NH Securities and Investment said Samsung's low-end smartphone sales in China were less than expected in the second quarter due to competition from Chinese handset makers and slowing demand there.
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