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The
South Korean tech giant's estimate for first-quarter operating
profit handily beat market forecasts and has boosted hopes that
its struggling mobile business will post its first annual profit
gain in three years, also benefiting from an improved
performance for mid-to-low tier devices and cost-cutting
efforts.
Samsung said January-March operating profit was likely 6.6
trillion won ($5.7 billion), well above the 5.6 trillion won
profit tipped by a Thomson Reuters StarMine SmartEstimate
derived from a survey of 23 analysts.
The firm will not disclose a full breakdown of its results until
late April, and gave no comment on the performance of its
business divisions.
More than a dozen brokerages had lifted forecasts for Samsung
earnings since late March encouraged by reports of
better-than-expected sales of its Galaxy S7 models, which boast
an improved camera, waterproofing and microSD storage support.
Samsung's mobile business was probably the top earner for the
first time in seven quarters, analysts say.
A decline in the value of the South Korean won is also expected
to help lift the firm's first-quarter bottom line.
But even so, competition from new products such as Apple Inc's
recently launched iPhone SE and Huawei Technologies Co Ltd's [HWT.UL]
upcoming flagship P9 phone are tempering investor enthusiasm.
"First quarter earnings will be the peak this year," said HMC
Investment analyst Greg Roh, adding that marketing costs for the
mobile business will rise in the next quarter, pushing profits
lower.
Investor caution stems from last year's launch of Galaxy S6
phones, which boasted major design changes and features and were
widely praised. Initially expected to be Samsung's best-selling
phones ever, sales fizzled following the launch.
"S7 sales popped in the beginning but could very well fade as
rivals launch new models," said Alpha Asset Management fund
manager C.J. Heo. "We have learned from the past."
Other analysts said Samsung's decision to launch the Galaxy S7
models a month earlier than their predecessors may have simply
have brought forward sales that would have been made in later
quarters.
Samsung's shares gave up early gains to be down 1.6 percent in
midday trade, compared with a 0.2 percent fall for the broader
market
(Reporting by Se Young Lee; Editing by Stephen Coates and Edwina
Gibbs)
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