Samsung Electronics sees operating profit jump on mobile sales

The upper end of the earnings forecast beats analysts' expectations

By Jennifer Chang, IDG News Service |  IT Management, Samsung, smartphones

Samsung Electronics said today that it expects a first-quarter operating profit of between 8.5 trillion won and 8.9 trillion won (US$7.6 billion to $8 billion), a sharp increase of at least 49 percent from a year earlier.

Market watchers said the Korean electronics giants appears to be poised to post better-than-expected results despite seasonally slow first-quarter demand for IT products and costs resulting from a patent dispute with its biggest rival, Apple.

The earlier consensus among local electronics industry analysts for an operating profit of 8.5 trillion won in the first quarter was at the low end of Samsung's forecast, according to Lee Seung-woo, an analyst at IBK Investment and Securities in Seoul. The upper end of the forecast is substantially higher.

The company also estimated revenue at between 51 and 53 trillion won, compared to 45.3 trillion won the year prior. Samsung's earnings guidance did not break down figures for each of its business units.

In addition, Samsung did not disclose its net profit estimate. It is due to announce actual first-quarter earnings, along with figures broken down by unit, later this month.

While Samsung did not explain the jump in profits, analysts attributed the rise to robust sales of smartphones and phablets like the Galaxy S3 and Galaxy Note 2 models.

"While the first-quarter is traditionally a slow season, Galaxy S3 sales were similar to the previous quarter's 14 million units, and Galaxy Note 2 sales gained about 1 million units to 9 million total," said Byun Han-joon, an analyst at KB Investment & Securities in Seoul, in a recent report.

Next quarter, the launch of the Galaxy S4 smartphone is expected by analysts to drive continued strong sales.

"I expect the Galaxy S4 to fuel Samsung Electronics' operating profit to be roughly 10 trillion won in the second quarter with sales of 25 million units worldwide," said LIG Investment & Securities analyst Choi Do-yeon. He expects Samsung's second quarter smartphone sales overall to reach 80 million units.

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