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Samsung eyes record profit on strong smartphone sales

Written By THA on Friday, 6 July 2012 | 15:56

The logo of Samsung Electronics is seen at the company's headquarters in Seoul July 6, 2012. REUTERS photo

Samsung Electronics said Friday it expected a record operating profit of 6.7 trillion won ($5.9 billion) in the second quarter, boosted by strong sales of its flagship Galaxy smartphones.

The Korean firm, which is battling with Apple's iPhone and iPad for supremacy in the lucrative smartphone and tablet market, has seen heavy demand for its new Galaxy S III phone, which was introduced in Europe in May.

Samsung, the world's largest electronics company, was giving earnings guidance before official results later this month.

The predicted operating profit for April-June would represent a 79 percent rise from a year earlier. The previous highest operating profit was 5.85 trillion won in the first quarter.

The company estimated a 19 percent rise in sales to 47 trillion won in the second quarter. It did not give a net profit figure or explain its forecasts.

Analysts said the strong result was largely thanks to robust smartphone sales. These account for more than half the operating profit despite the Korean firm's continuing legal tussles with US rival Apple.

They said a strong turnaround at the flat panel operation compared with a year earlier also helped the estimated bottom line.

Gains were likely to continue into the third quarter due to strong demand both for the Galaxy S III and for mobile devices developed by its rivals.

These would boost sales of Samsung's chips and display components that are used in competitors' products.

Samsung introduced its Galaxy S III on May 29 in Europe to try to boost demand before the release of Apple's iPhone 5.

"For the third quarter, we forecast revenue and operating profit will stand at a record high of 54 trillion won and 8.5 trillion, respectively, thanks to the effect of Galaxy S III on the handset and component divisions," said Nomura analyst C.W. Chung.

Choi Do-Yeon, an analyst at LIG Investment & Securities, said the company could easily reach the seven trillion won operating profit level.

"Mobile phones, rather than chips, are now Samsung's main growth engine," Choi told Yonhap news agency.

Samsung and Apple have launched dozens of legal actions alleging patent infringements against each other in 10 countries worldwide.

In the latest setback for Samsung, a US judge last week granted Apple's request for an injunction blocking US sales of Samsung Galaxy Nexus smartphones.

These are made in collaboration with Google to challenge the iPhone.

Despite the courtroom tussles, analysts remained bullish about the next quarter's results.

"Concerns about the patent lawsuits and the iPhone release have already been factored in. A seven trillion won level operating profit is viable," Lim Do-Ri of Shinyoung Securities told Yonhap.
(SEOUL - Agence France-Presse)
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