Samsung Electronics Co. (005930), the world’s largest maker of TVs and mobile phones, jumped in Seoul trading after forecasting higher demand for panels and handsets, and retaining its position as the world’s biggest phone seller.
Emerging markets may spur demand for digital appliances, Asia’s biggest electronics maker said today after second-quarter profit missed analysts’ estimates. Demand for TVs in developed markets may fall because of Europe’s economic slowdown, the Suwon, South Korea-based company said.
The forecast and phone-sales data helped lift the shares as much as 4.7 percent as Samsung topped Apple Inc. (AAPL) in the $219 billion smartphone market with such products as the Galaxy S III. Samsung is introducing TVs with new display and Web technologies while diversifying into semiconductors for mobile devices to keep its dominance across the businesses and weather a global economic slowdown.
“The third quarter is crucial,” Lee Jin Woo, a fund manager at Seoul-based KTB Asset Management Co., which oversees $5.8 billion in assets, said by phone. “Galaxy S III phone sales and the magnitude of a turnaround in chips will be the key.”
Sales of the new Galaxy S III smartphone are “strong” and Samsung expects the model to be “a huge success,” helping boost third-quarter performance, Kim Hyun Joon, a vice president at the mobile-phone business, said on a conference call after the earnings announcement.
“We hope to see another strong quarterly result,” he said. “We will try to make the most of market opportunities.”
The shares changed hands at 1,226,000 won, up 4.6 percent as of 1:22 p.m., the most since July 13. The stock has gained 16 percent this year, compared with a 42 percent jump in Apple’s shares and a 32 percent drop in shares of Sony Corp. in Tokyo.
Samsung today said net income in the three months ended June 30 rose 48 percent to a record 5.19 trillion won ($4.5 billion). The average of 25 analysts’ estimates compiled by Bloomberg was profit of 5.54 trillion won. Sales at 47.6 trillion won also trailed estimates for 49.8 trillion won.
Companywide operating profit in the second quarter jumped 79 percent to a record 6.72 trillion won, beating the estimate for 6.58 trillion won. Samsung announced a 500 won per share interim dividend.
Record Smartphone Sales
Operating profit at the telecommunications business more than doubled to 4.19 trillion won, Samsung said in the statement. That fell short of the 4.4 trillion-won median of four analyst estimates compiled by Bloomberg.
Samsung’s second-quarter smartphone shipments more than doubled to 50.5 million units, a record volume for a single vendor, even as global sales grew at the slowest pace in almost three years, researcher Strategy Analytics said today.
Samsung led the market with a 34.6 percent share, almost double the 17.8 percent for Apple, which sold 26 million iPhones, the Boston-based researcher said. Including basic types, Samsung sold 93 million phones in the three months, keeping its lead over Nokia for a second straight quarter.
Samsung and Apple combined controlled almost half of the global smartphone market, International Data Corp. said in a separate statement today. Smartphones allow users to shoot high- definition images, read books and browse the Internet.
“Smartphones have been the least affected by the macro economy, and Samsung has the strength to expand its market share,” Lee Sun Tae, a Seoul-based analyst at NH Investment & Securities Co., said before the announcement.
Apple Sales Miss
Apple this week reported quarterly sales and profit that missed estimates for the second time since 2003 after selling fewer iPhones than expected.
Samsung, the world’s biggest maker of televisions and flat- panel screens, reported profit in the businesses even as industrywide demand slows.
Earnings at the consumer-electronics division that makes TVs jumped 66 percent to 760 billion won, exceeding the 542.5 billion-won median of the analysts’ estimates compiled by Bloomberg. The display business had a profit of 750 billion won, also higher than the 600 billion-won estimate.
While flat-screen TV sales aren’t picking up, the company is benefiting from demand for displays used in mobile devices. Operating profit at the unit making panels for smartphones, including the Galaxy models, more than tripled in the second quarter, accounting for 86 percent of earnings at the display business, according to IBK Securities Co. estimates.
Profit at the chip business fell 38 percent to 1.11 trillion won, the world’s biggest maker of computer-memory chips said. Demand for PC memory probably will stay weak through the third quarter while competition in DRAM chips for mobile devices may intensify, Samsung said today.
The price of the benchmark DDR3 2-gigabit DRAM averaged $1.03 in the last quarter, compared with $1.82 a year earlier, according to data compiled by Bloomberg.
Samsung, the exclusive manufacturer of Apple-designed chips powering the iPhone and the iPad, has been diversifying from PC DRAM to more profitable semiconductor products used in mobile devices and servers.
Last month, the company said it plans to spend 2.25 trillion won to build a new plant making mobile-phone processors. Samsung plans to spend 15 trillion won on the semiconductor business this year.
To contact the reporter on this story: Jun Yang in Seoul at email@example.com