South Korean conglomerate Samsung Electronics Co. Ltd. (SSNLF.PK,SSNNF.PK) said late Thursday that it expects operating profit for the third quarter to nearly double from last year as the continued strong demand for Galaxy S3 smartphones and the Galaxy Note 2 phablet will more than offset weakness in other businesses. Quarterly sales are expected to increase about 26 percent year-over-year.
Samsung is set to hit a new record in operating profit for the fourth consecutive quarter, and its quarterly sales have breached the 50 trillion won mark for the first time. The company is scheduled to report financial results for the third quarter at the end of October.
According to a regulatory filing, Suwon-based Samsung estimates operating profit for the third quarter to be 8.10 trillion won or about $7.3 billion, significantly above analysts' expectations of 7.6 trillion won.
This will be the highest ever quarterly operating profit reported by the company. Samsung's mobile business is said to have accounted for nearly 70 percent of the operating profit.
The forecast is 90.6 percent higher than the company's year-ago quarter operating profit of 4.25 trillion won, and represents 20.5 percent growth from second-quarter operating profit of 6.72 trillion won.
The company also projected sales for the quarter to be 52 trillion won, an increase of 26.0 percent from the prior-year quarter's sales of 41.27 trillion won, just above Street estimates of 51.7 trillion won. Total sales is seen to grow 9.2 percent from the previous quarter's sales of 47.60 trillion won.
Looking further ahead to the fourth quarter, Samsung is expected to continue its strong lead in smartphone shipments with the S3 and Galaxy Note 2 phablet, a hybrid of a mini tablet and smartphone equipped with a pen and a larger screen than the S3, despite rival Apple, Inc. (AAPL) launching the new iPhone 5 last month.
The launch of new smartphones running on Microsoft Corp.'s (MSFT) new Windows operating system is also estimated to boost Samsung's semiconductor business with higher sales of mobile chips.
Samsung's Galaxy S3 sales have reportedly breached the 20 million units mark in early September, just 100 days since its launch in May. The company is said to have set its eyes on the 30 million mark by year-end.
Samsung and Apple are strong rivals in the smartphone market and are embroiled in costly patent tussles in courtrooms across four continents. A U.S. federal court in late August found both the companies infringing each others mobile patents and ordered Samsung to pay $1.05 billion in damages to Apple.
Many of Samsung's devices have also been banned in the U.S. market following the verdict, but the ban was lifted on Wednesday for the Galaxy Tab 10.1 that was banned several months ago.
The electronics giant has recently shifted into emergency mode first time since the 2008 financial crisis, to better deal with fallout from worsening eurozone economic crisis. The company is looking to cut its investment in semiconductors next year by as much as 30 percent or 16 trillion won, according to the Korea Times.
Samsung shares fell 8,000 won or 0.59 percent in Friday's regular trading and is currently trading at 1,359,000 won on the Kospi on a volume of 0.17 million shares.
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by RTT Staff Writer
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