Samsung: World LOVES our chips 'n' mobes – expect a record quarter
But investors unimpressed by soaring smartphone sales
Samsung is expecting to announce yet another quarter of record profits at the end of this month, no doubt driven by its Galaxy smartphone sales.
The Korean tech giant said its second quarter operating profit will have shot up 14.5 per cent from the previous quarter and 79 per cent from the same quarter last year to 6.7 trillion won ($5.9bn, £3.8bn).
Samsung's Galaxy smartphones have clawed their way to the top of the market in recent times, overtaking even Apple's Jesus-mobe. The Galaxy mobes have proven so popular that Samsung couldn't keep up with the demand for the latest iteration – the SIII.
Parts shortages affected the supply of Galaxy SIIIs worldwide, but the appetite for the phones was also much greater than Samsung had anticipated. The company has previously said it expects the phone to have sold more than 10 million units by July – pretty good going considering it was only launched in May.
The firm said that sales would be around 47 trillion won ($41.4bn, £26.6bn), increasing 20 per cent from the same quarter last year, but it didn't give any breakdown of how much of that would be made up of mobiles.
However, analysts have estimated that operating profit from Samsung's mobile division could have more than doubled, now accounting for over two-thirds of all its income. That analysis would mean that Samsung's other businesses in chips and tellies were still not doing that well.
TV sales have been falling for everyone as the global recession – and the resulting general lack of any money for big ticket purchases – have stopped people in Europe, and to a lesser extent the US, from buying new televisions. Nevertheless, Samsung has been doing better in that sector than its Japanese rivals, who also have to contend with a strong yen mucking up their overseas sales.
Samsung is also the world's number one chipmaker at a time when the market for memory is also quite poor, particularly for DRAM. The Korean firm is also strong in NAND flash chips and other semiconductors used in mobile technology – and there's a bit more demand for those, as smartphones wolf down mobile memory. Samsung also has all that cash from selling smartphones to plough back into its chip business.
But it's not enough for investors. Despite, or maybe even because of, its anticipated high quarterly results, shares dropped 2 per cent after Samsung released them. Perhaps shareholders don't think that the firm's earnings can just keep getting better or the global recession will ever ease off enough to allow demand for TVs w chips to recover.
Or maybe investors have started to have serious doubts about the patent wars with Apple. Samsung has recently lost two battles against the fruity firm in the US, with both the Galaxy Tab 10.1 and the Galaxy Nexus smartphone now banned pending trials over the alleged infringements. ®