Samsung expects 56% fall in Q3 profits, but there’s some good news too

Samsung has projected a steep 56% fall in Q3 profits, the company’s guidance calling for 7.7T won ($6.4B). It is also expecting revenue to be down 5.3%, to 62T won ($51.8B).

It’s thought unlikely that sales of the troubled Galaxy Fold device will contribute much to Samsung’s bottom line, but there is some good news in the mix …

Reuters reports that the projected fall, though dramatic, is actually smaller than analysts had feared, thanks to the Galaxy Note 10.

Strong sales of Samsung Electronics’ Galaxy Note 10 smartphone series are limiting forecast profit falls at the South Korean tech giant, raising hopes it is getting back on a growth track after years of moribund sales […]

Samsung, the world’s largest smartphone maker, is powering ahead with the launch of 5G phones and $2,000 foldable handsets as it heats up competition with rivals U.S. Apple and China’s Huawei [HWT.UL] following a battery explosion scandal in 2017 that hurt sales […]

Samsung said it has sold more than one million of the 5G Note 10 handsets in South Korea, making it the company’s fastest selling flagship model at home, and sales in Europe were also strong […]

Analysts said the strategy may be paying off as the company on Tuesday flagged a smaller-than-expected fall in third quarter operating profit, saying at the same time that sales of the Note 10 both at home and in Europe had been strong since the Aug. 23 launch.

Some analysts are also optimistic about the company’s move into folding phones, despite the disastrous start with the Galaxy Fold, which saw review units fail and pre-orders cancelled ahead of a long-delayed launch with a revamped design.

“With its foldable smartphone that no other competitors have yet launched, Samsung will likely lead the high-end smartphone market as it would mass produce foldable smartphones next year,” said Song Myung-sup, an analyst at HI Investment & Securities.

US sanctions against Huawei are also likely to help Samsung’s cheaper A-series smartphones as customers switch to these from the Honor range.

Other analysts are more pessimistic, however, arguing that the company’s chip business has always been the most reliable money-spinner, but that is currently experiencing constrained demand.

“The strong smartphone sales has limited ability to fix all Samsung’s issues,” said Park Sung-soon, an analyst at Cape Investment & Securities. “Data center customers, a major driver for memory chip business, are pursuing conservative investment for the time being, not particularly uplifting news for Samsung.”

The projected 56% fall in Q3 profits saw the company’s shares climb around 1.5%.

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