South Korean telecom giant Samsung Electronics Co yesterday flagged a 5.2 percent rise in its second-quarter operating profit from the same period last year, missing analyst estimates.
Samsung’s operating profit is expected to come to 14.8 trillion won (US$13.26 billion) for the April-to-June period, higher than 14.07 trillion won in the same period last year, but down from the record 15.64 trillion won of the first quarter of the year.
LOW END
The forecast came in at the low end of the market consensus, which averaged 15.3 trillion won.
“It’s a bit disappointing,” said Ko Gyeong-beom of Yuanta Securities Korea.
The company posted expectation-beating operating profits in several previous quarters, Ko said.
Sales are estimated at 58 trillion won, down 4.9 percent from 61 trillion won in the same period last year.
Industry sources said that smartphone sales were weaker in the face of mounting competition from rivals and increasing marketing costs for new mobile products.
Weak LCD display prices and a slow display screens sector are also blamed for the disappointing results, they said.
CHIPS
The company’s strong semiconductor business filled the gap and robust sales of TV sets also helped, they said.
Regardless of the 5.2 percent year-on-year increase, the second-quarter operating profit fell far short of the all-time record high of 15.6 trillion won tallied for the first quarter of the year.
It thus failed to stretch quarter-on-quarter operating profit growth into the seventh consecutive quarter.
Samsung is withholding net profit and sector-by-sector business performance data until it releases its final earnings report, which is expected later this month.
SHARES
Samsung Electronics shares were down 1.96 percent in mid-morning trade, reflecting the letdown.
Samsung Electronics stock has fallen more than 13 percent following a 50-1 stock split two months ago aimed at allowing smaller investors to buy into the giant company.
Adding to this stress, regulators pressed Samsung Life Insurance Co, a financial arm of the Samsung Group, to sell a large portion of its 8.23 percent stake in Samsung Electronics as the government attempts to cut back the influence of the country’s family-controlled conglomerates.
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