SEOUL (Reuters) - Samsung Electronics Co Ltd (005930.KS) estimated its April-June operating profit rose 47 percent to a record 9.5 trillion won, lifted by the late April launch of its flagship Galaxy S4 smartphones.
Following are reactions from analysts and fund managers:
”We expect quarter-on-quarter operating profit to increase in the third quarter, as the mobile business is expected to save on marketing costs and increase margins.
”Also, the third quarter is usually a good season for component businesses such as semiconductors and display, and with Samsung’s OLED business now fully loaded, displays are expected to bolster earnings.
”One of the biggest risks for Samsung Electronics going forward is that 70 percent of total operating profit comes from mobile business. Diversification is key. Samsung needs to engage in active business transition until end-2014.
“Wearable devices are the next stage in a saturated industry that needs constant innovation to survive. We’ll see flexible smartphones in the fourth-quarter from Samsung and LG Electronics, and iWatch and Galaxy Watch are expected to be one of the first waves. There won’t be many companies that will be able to dominate the wearable device market, such as Samsung, Apple and LG Electronics.”
”The (expected launch of) wearable devices won’t be able to replace Samsung’s smartphone business, but it’s more likely to complement its earnings at best.
“Competition in the smartphone market will heat up in the current quarter as new smartphones come to the market. Although I cannot completely rule out the effect of Apple, Apple keeps releasing nothing particularly new, something similar to earlier models. Therefore, it’s not likely to have a huge (adverse) impact on Samsung earnings.”
”I think Samsung spent more on marketing expenses than expected because of the launch of Galaxy S4 smartphone, which led the company’s results to miss the market consensus.
“Despite the possible launch of Apple’s new models in the current quarter, I expect Samsung to decrease marketing expenses and to boost smartphone sales to 84 million units, which will lead to a mobile profit of 6.9 trillion won.”
“The slowdown in its handset business appears to be worse than expected and the disappointing result simply reinforces the market view that Samsung’s smartphone growth momentum is slowing,” said Lee Sei-chul, an analyst at Meritz Securities.
“But it’s got the component side of business, which is showing solid improvement, and a new handset product lineup for the third quarter, so (overall) earnings are likely to grow again in the current quarter.”
Reporting by Joyce Lee, Narae Kim, Hyunjoo Jin and Miyoung Kim; Editing by Edwina Gibbs and Stephen Coates