Samsung expects big profit despite Note7 crisis

Profit is expected to have soared nearly 50 percent in the fourth quarter

The financial impact of the Note7 recall seems to be largely behind Samsung Electronics, which on Friday forecast that its profit has grown year-on-year by close to 50 percent in the fourth quarter.

A major proportion of the profit of the largest smartphone company is expected to come from components such as memory chips and display panels, rather than from smartphones, according to analysts, a shift that was noticed in the third quarter as well.

"They were fortunate that their memory and displays businesses could offset the doom and gloom resulting from the Note 7 debacle last quarter," said Bryan Ma, vice president for devices research at IDC.

Samsung said in its earnings guidance released Friday that its profit in the fourth quarter is expected to be 9.2 trillion Korean won (US$7.6 billion), up from 6.14 trillion won in the same quarter last year. Revenue for the quarter is expected to be around 53 trillion won, which is about the same as in the fourth quarter of the previous year.

The South Korean company suffered a major hit to its reputation and finances following its announcement of a recall and later the stopping of production in October of the Galaxy Note7 smartphones after its lithium-ion batteries were found to overheat and even explode. Samsung has not provided yet a detailed explanation of what really went wrong with the phones.

"Moving forward, they still need to publicly explain the reason for the battery problems; it's a critical step toward reassuring consumers that their products can be trusted," Ma said.

Following the Note7 debacle, the company revised its revenue and profit forecast for the third quarter. It said in October that revenue for the quarter was likely to be about 47 trillion won, down from the 49 trillion won that it had expected earlier in that month in a preliminary forecast. Operating profit was expected to drop by about 2.6 trillion won to 5.2 trillion won.

While the profit of the company’s mobile business not unexpectedly fell to 0.10 trillion won in the third quarter, its semiconductor profit was 3.37 trillion won, driven by demand for memory chips, particularly high density and high-performance mobile and server products. Its display panel business earned 1.02 trillion won in operating profit for the quarter because of increased earnings on OLED panels and increased shipments of large-sized LCD TV panels.

Rival Apple appears to be far more profitable than Samsung in the smartphone business as it does not play in the low-end segment where fierce competition from Chinese vendors has cut into margins. In the third quarter, Apple cornered 91 percent of total worldwide operating profits of $9.4 billion earned by smartphone companies, according to research firm Strategy Analytics. The other companies figuring in the list were Chinese vendors like Huawei, Vivo and Oppo.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Ribeiro

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?