In Samsung has declared that it estimates weaker third-quarter earnings, reflecting a decline in demand for its computer chips and flat panels. However, the companys forecasts were above the most bullish market expectations as brisk sales of its flagship smartphones likely provided support to the company's bottom line.
The electronics giant has estimated its quarterly operating profit at 4.20 trillion won ($3.5 billion) versus a consensus forecast of 3.4 trillion won by analysts. That would be down 14 percent from a year ago but up 12 percent from the preceding quarter. The profit estimate easily topped the most bullish street estimate of 3.95 trillion won. The company will provide detailed earnings later this month.
Samsung's mainstay memory chip business has come under pressure as the overall industry remains in a severe downturn in the last few quarters due to oversupply, dragging down the prices for dynamic random access memory chips and NAND flash memory chips. Last month, Samsung's component division chief, Kwon Oh-hyun, said that the global chip industry isn't likely to stage a recovery this year, citing ongoing global economic uncertainties.
Samsung, the world's biggest maker of memory chips and LCDs by sales, is the first major global technology firm to give earnings guidance for the third quarter. Analysts are of the opinion that strong sales growth of its non-memory chips and advanced flat displays, largely driven by brisk sales of smartphones and tablet computing devices, will cushion slowing growth of Samsung's computer memory chips and conventional flat displays.
Analysts say Samsung is one of the best-placed companies to deliver something fresh and exciting to rival Apple. It already makes the closest competitor by sales to Apples iPad tablet. Apple led the world by shipping 20.3 million smartphones in the second quarter, while Samsung shipped 19.6 million. Samsung likely passed Apple in the third quarter as the Korean company ramped up sales of its flagship Galaxy S II smartphone, unveiled in April, and the iPhone's growth likely levelled off as consumers awaited the new model.
Samsung, which worked out how to make black and white TVs in the 1970s by tearing apart Japanese models, has become a top global brand over the past decade.It boasts a market value of $118 billion, much bigger than the combined value of Sony Corp, Nokia, Research In Motion, Toshiba and Panasonic Corp.
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