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Samsung Electronics Sees 97% Surge In Q1 Operating Profit On Smartphone Growth


South Korean conglomerate Samsung Electronics Co. Ltd. (SSNLF.PK, SSNNF.PK) on late Thursday forecast a 97 percent year-over-year surge in operating profit for the first quarter.

The results likely reflect strong sales of the company's Galaxy smartphones and the Galaxy Note mini tablet, offsetting weak performance at the memory chip business.

Samsung did not provide a forecast for net profit, but projects quarterly sales to increase about 22 percent year-over-year. The company is scheduled to report financial results for the first quarter on April 27.

Samsung estimates operating profit for the first quarter to be 5.80 trillion won, or about $5.1 billion, above analysts' expectations of 5 trillion won.

The forecast is 96.6 percent higher than the company's operating profit of 2.95 trillion won in the year-ago period. It also represents 9.4 percent growth from fourth-quarter operating profit of 5.30 trillion won.

In late January, Samsung reported a 17 percent year-over-year increase in profit for the fourth quarter.

Samsung estimates sales for the first quarter to be 45 trillion won, an increase of 21.7 percent from the prior-year quarter's sales of 36.99 trillion won. However, total sales is seen to decline 4.9 percent from the previous quarter's sales of 47.30 trillion won.

Samsung's shipment of smartphones is expected to have more than tripled from the year-ago period to 44 million units in the first quarter and exceed 50 million units in the second quarter.

The company reportedly plans to sell 380 million mobile handsets and double sales of smartphones this year. Samsung sold about 97 million units of smartphones and 327.4 million handsets in 2011.

Meanwhile, sales of the Galaxy Note mini tablet have reportedly topped 5 million after its sales commenced in October 2011.

Samsung is the world's largest manufacturer of liquid crystal displays as well as flat-screen televisions and is currently ranked second only to Nokia Corp. (NOK) in the production of mobile phones.

Amid a global patent war, Samsung is locked in patent infringement battles with Apple Inc. (AAPL) since last April, at courts in several countries in the European Union, the U.S. and Asia, involving smartphone and tablet patents. However, it did not affect their shipments.

Samsung is expected to continue reporting strong earnings in 2012, with smartphone shipments likely to remain firm, and a rebound anticipated in dynamic random access memory or DRAM, prices, which had slumped last year. The drop in DRAM chip prices had squeezed the company's earnings.

In addition, the recent bankruptcy of Japanese chipmaker Elpida Memory Inc. (ELPDF.PK) has prompted that company's customers to turn to Samsung and another South Korean company Hynix in order to ensure smooth supply of chips for use in smartphones and laptops.

In Friday's trading on the South Korean stock exchange, Samsung shares are down 15,000 won or 1.13 percent to 1,315,000 won.

by RTTNews Staff Writer

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