October 7, 2016
Reuters reported on the OEM’s expectations for the third quarter results later this month, including that it expects profit to grow by 5.6 percent, “beating estimates” thanks to a “chip surge” and “pickup in chip and display earnings”, which are “likely [to] offset the impact” of the recent global smartphone recall that was said to have “roiled” Samsung.
Operating profit for July to September is expected to be ?7.8 trillion ($6.9 billion/€6.2 billion), which would be higher than last year’s figure of ?7.4 trillion ($6.6 billion/€5.9 billion), and which is the same expected result from analysts. However, the OEM “gave no details on the cost of recalling” the 2.5 million Galaxy Note 7 devices, which “could have undercut mobile earnings by at least” ?1 trillion ($896 million/€805 million). Revenue for the quarter meanwhile is expected to fall 5.2 percent to ?49 trillion ($43 billion/€39 billion), less than analysts’ expectations of ?51.1 trillion ($45.8 billion/€41.1 billion).
On the chip side of the business, the OEM’s semiconductor business makes it the “world’s top memory chip maker”, and this unit is “thriving as Apple and peers boot the global market”, with an ironic twist being that the issues with the Note 7 “could also boost” the chip business because of the “sudden need for chips” in the replacement phones. This situation is “exacerbating already tight memory market conditions, which could push prices higher”.
The OEM’s shares were up 0.5 percent at ?1.7 million ($1,532/€1,368), having reached a “record high” of ?1.716 million ($1,538/€1,382) after Samsung stated it was “carefully reviewing” proposals for a “radical corporate makeover”, which would split the company into “a holding vehicle for ownership purposes and a separate operating company”.
Neither Samsung nor Reuters referenced the potential impact of Samsung’s deal last month with HP Inc, where the latter acquired Samsung’s printing business for $1.05 billion (€932.8 million). The Recycler had previously reported Samsung was mulling over a $1.8 billion (€1.6 billion) sale to HP Inc, after the Seoul Economic Daily outlined Samsung was “considering selling its printer business” as it “shifts focus to its core businesses”.
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