Samsung expects to post an increase of about 24 percent in the profit of its mobile division to 2.2 trillion won, or about $1.9 billion, which is the first year-on-year rise in seven quarters. This compares with an estimated operating profit of about 3.5 trillion won expected from the company’s chip unit.
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South Korean market analysts believe it will be a few time yet before Samsung can begin turning its smartphone business around with their estimates putting a significant return to profits in the division sometime after 2017.
Samsung reported operating profit of 7.3 trillion won for 3QFY15, marking a year-over-year (YoY) increase of 78% and beating consensus estimates of 6.6 trillion won by 10%.
Samsung didn’t offer a divisional breakdown of sales and earnings nor a company-wide net income figure as is its practice with preliminary quarterly guidance. Samsung has not stopped there, going on to develop and introduce curved screen, changing from plastic to metal body, and resorting to price cuts after launch in order to boost sales of its new flagship Galaxy S6 as the sales fell short of the target in the third quarter.
Smartphone earnings are likely to have improved from a year earlier on the back of new lower-end models and the August launch of the premium Galaxy Note 5.
Suwon, South Korea-based Samsung is now projected to report its first quarterly profit growth in eight quarters.
Most of Samsung’s problems are its phone business.
A strong performance in the mobile chip market from Samsung has offset worries about its smartphone businesses, which is struggling amid intense competition from Apple, LG and a growing number of Chinese manufacturers also taking on more established brands.
Market watchers estimated that Samsung’s higher-than-expected earnings may have come from solid demand for small organic light emitting diodes (OLED) used for low- and mid-end smartphones. The company opened a new semiconductor research- and-design center in Santa Clara, California, last month.
“The falling portion of PC DRAMs, and sound profitability through the 20 nanometer technology has lent support to its chip business”, said Hwang Joon-ho, an analyst from Daewoo Securities Co.
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There is an expectancy that the company will announce plans like dividend payout or share buyback as the year comes to an end, said Yoo Jong Woo, an analyst at Korea Investment & Securities Co.
