Samsung races ahead on mobiles
While the fruity cargo cult Apple flounders in the mobile area, its rival Samsung is doing rather well.
The outfit is poised to issue guidance for its best quarterly profit in more than two years, propelled by a surge in mobile earnings on the back of robust sales of its flagship Galaxy S7 smartphones.
The South Korean giant will disclose its estimates for second-quarter earnings on Thursday, with analysts predicting a strong mobile division contributed to a 13 percent jump in operating profit from the same period a year earlier.
Analysts are expecting to see a April-June operating profit of $6.8 billion which is the highest profit since January-March of 2014. Even more oddly it is the mobile division which is making a lot of the cash
This is because Galaxy S7 sales are better than expected in the first half, and the semiconductor business is also outperforming rivals.
Samsung’s smartphone business had been squeezed before the start of this year between Apple at the high end of the market, and Chinese rivals like Huawei in the budget segment. But the Galaxy S7 has provided a catalyst for the earnings rebound, likely putting the mobile business on track to record its first annual profit growth in three years. Apple has also slumped in China and failed to come up with a new product for some time.
Some analysts say Samsung shipped around 16 million Galaxy S7s in April-June, with a higher-priced curved-screen version outselling its flat-screen counterpart and boosting margins. Lackluster sales of offerings from rivals such as Apple and LG Electronics also helped reduced marketing expenses, they said.
Samsung’s chip business has not been doing so well. Its quarterly profit sink to its lowest in nearly two years due to weak demand from makers of other smartphones and personal computers.
But signs of some price recovery for DRAM chips starting last month and Samsung’s dominance in the premium solid-state disc drive market with its 3D NAND chip production technology suggest a pickup in coming months, analysts said.