Samsung predicts big earnings jump in Q2, still disappoints

The company said it expects operating profit to increase at least 40 percent over 2012, but analysts expected more

Samsung Electronics predicted a big jump in profit for the second quarter compared to a year earlier, but the company's explosive growth is slowing amid signs its top end Galaxy smartphones are less popular than expected.

Samsung said that its operating profit for the April-June quarter will probably be between 9.3 trillion won ($US8.1 billion) and 9.7 trillion won. This is at least a 44 per cent gain from what it generated during the same stretch in 2012, and Samsung said sales are also likely up around 20 per cent.

Those are strong gains, but analysts and investors had expected better. Bloomberg said a survey of 34 financial analysts predicted an average of 10 trillion won in earnings. A number of investment banks have cut their ratings on the Korean company in recent weeks, and its stock has fallen.

The results correspond to the launch of Samsung's flagship Galaxy S4, first released in April. The phone was a highly anticipated follow-up to Samsung's successful S3, and the company held a major launch event at New York City's Radio City Music Hall, with a live broadcast to people watching in nearby Times Square.

Samsung is now the world's largest smartphone maker as well as a dominant manufacturer of semiconductors and displays, but phones make up the bulk of its profits.

The company said it shipped 10 million of the handset in May, less than a month after the global launch, but has been silent since then about results. Many reviewers said the phone was more an upgrade from the S3 and complained about the large amount of Samsung proprietary software on the device. In Japan, the country's largest carrier NTT DoCoMo ran a summer campaign with big discounts for both the S4 and a Sony handset, and the carrier recently said that the slightly less expensive Sony phone is selling far better.

Since the launch of the original S4, Samsung has released several variations. These include a stock Android version, the Galaxy Zoom S4 with a better camera and screen, a "mini" version, and the Galaxy S4 Active, a more rugged, waterproof design.

Samsung typically announces a target range for its earnings a few weeks before its actual earnings announcement.

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Jay Alabaster

IDG News Service
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