Samsung Electronics is on fire! In a good way as profits leap

Memory and monitor surges trump phlaming phablet fiasco

Samsung Electronics, the Chaebol's business that encompasses smartphones, monitors, memory and more, has reported a bumper fourth quarter despite its phlaming phablet fiasco.

The company today reported 53.33 trillion Korean Won (US$45.5bn) in consolidated revenue and 9.22 trillion Won ($7.93bn) in operating profit for the quarter.

That revenue figure is flat, but the profits are a pleasant surprise because the company thought it would have to douse ill-will generated by the Galaxy Note 7 burnout with lots of money, while also managing a slow quarter for TV sales.

Instead, the company says displays of all sorts had a strong quarter. Memory went well: the company reported “Robust sales of high-end, high-performance memory products and expanded process migration in V-NAND.”

“Robust” translated into operating profit jumping 77 percent to 4.95 trillion won ($3.9bn( from a year earlier.

The Register reckons that's partly due to enthusiasm for all-flash arrays, which have rapidly become a must-have purchase when upgrading storage kit

The phones business grew, too, with operating profit rose 12 percent as punter snapped up fireproofed models from Samsung's deep range. Phones took a hit due to the Note 7, but the company feels the worst is behind it.

Even US president Donald Trump helped a bit: Samsung says “The stronger US dollar against the Korean won also had a positive impact on operating profits.”

For FY 2016, Samsung says it brought in KRW 201.87 trillion and clocked operating profit of KRW 29.24 trillion.

The company is now predicting a tricky first quarter, largely due to seasonal factors. But its outlook for 2017 is bullish. Memory sales are expected to surge as big data rigs create demand for RAM, while punters' desire for bigger on-board phone storage won't hurt.

“For NAND, earnings will be driven by higher demand for high-density SSD including NVMe over 256GB and increased adoption of high-density SSD in data centers and enterprise servers,” the company says, adding that it plans “expanding 1Xnm process migration” to bring denser, more energy-efficient memory to market as soon as possible.

“Slow growth” is predicted for smartphones, a product category in which Samsung's TEXT says we can expect”water and dust-proof features and fingerprint recognition” in its mid-range models, plus efforts to “strengthen its software and service competencies to provide new customer values by expanding the roll out of services such as Samsung Cloud and Samsung Pay, and by introducing AI-based services on premium smartphones.”

Overall, the news is good enough that the company confirmed its plans to re-purchase about $8bn of its own stock, a sign that dividends and share price growth alone won't give investors all they hope for but also a sign the business has plenty of cash to wield. ®


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