Seoul: Samsung Electronics' weakest profit estimate in six quarters could be a short-term blip with an expected recovery in the company's mainstay memory chip business and surging smartphone sales fuelling earnings growth.
The world's top maker of memory chips and flat screens predicted its October-December profits would be below market expectations. Analysts blamed sluggish demand for computers and flat-screen TVs for steep falls in chip and panel prices.
After a weak start, Samsung is emerging as a credible challenger to Apple with its Galaxy S high-end smartphone, powered by Google's Android software. Samsung's Galaxy Tab is seen by some as rival to Apple's iPad tablet.
"Samsung has successfully expanded into the smartphone and tablet PC segments. Samsung is a totally different story compared to pure chip and display plays. Its diversified portfolio creates stable profits in the cyclical businesses," said Ahn Young-hoe, a fund manager at KTB Asset Management.
Combined value
Samsung, which has become a global brand in the space of 10 years, now boasts a market value of $136 billion (Dh500.2 billion), equal to the combined value of Sony, Nokia, Toshiba and Panasonic. Samsung shares have jumped 25 per cent since November and struck a record high on Monday on expectations of a recovery in profits. Out of 46 analysts tracking Samsung, only two have a hold rating, while the others have a buy or strong buy.
Samsung, the first major global technology firm to flag preliminary December quarter results, has held on to its No 1 slot in TVs against Sony and Panasonic and is performing strongly over US chip rival Micron Technology.
"Only Samsung can rival Apple in tablets and smartphones. We think these segments will continue to grow. Earnings at Samsung hit the bottom in the fourth quarter," said Kim Young-Chan, analyst at Shinhan Investment Corp.
