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Samsung's Q3 profit down by 14 percent, still beats forecast

Samsung is expecting a lot from its Smartphone and Tablet division in the fourth quarter of the year

Samsung electronics, world’s biggest technology firm by revenue is all set for the decrease of their revenue further in the fourth quarter because of persistent decline of the prices of their memory chips as well as their flat screens which even failed to show a strong rebound. But now it seems like they have managed better revenue than estimated in the last quarter.

Though it seems that, the company investors are now looking forward with the telecom business as it might help them in the crucial year-end holiday season. The Samsung Galaxy line of tablets and smartphones are the major contributors in the telecom industry, where the Galaxy tab is believed to be a real competitor for Apple’s iPad.

Ahn Seong-ho, an analyst at Hanwha Securities says that, Samsung’s telecom business was a big surprise and other businesses fared better than expected. He also added that he thought that Apple's new iPhone might slow down Samsung’s earnings but as they are not releasing iPhone5, the iPhone 4S would not be a burden on Samsung in the fourth quarter.

Samsung estimated its quarterly operating profit at 4.20 trillion won ($3.5 billion), which was forecasted as 3.4 trillion won by analysts surveyed by Thomson Reuters I/B/E/S. Though this figure is about 12 percent from the preceding quarter, but still 14 percent down from that of last year's. They estimated third quarter sales at 41.0 trillion won and they will provide details earnings later this month.

The telecom division is expected to have much more earnings from the semiconductor business as its tablets and smartphone business grew, after Apple’s newest iPhone left investors and Apple’s fans wishing for more than just polished up version of its previous device.

Samsung’s telecom division, mostly the Galaxy range of Smartphones and Tablets, running on the mostly Google’s Android operating system has already been compared with Apple’s devices. The patent war has also played a great role in both positive and negative aspects of the Galaxy line up. Smartphones may now account for one-third of Samsung's handset portfolio, which is up from 26 percent in the second quarter and 12percent a year ago, lifting the profit margin of its overall handset business to around 14percent, according to analysts.

With all these, Apple is also the biggest customer of Samsung for chips and displays. All these increases Samsung’s expectation in recording a report of profit with the help of these Smartphones and Tabs and also to overtake Apple as a world’s biggest smartphone vendor.


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Pallab Jyotee Hazarika, 2011-10-11 (Update: 2012-05-26)