Sam­sung flags profit jump de­spite re­call cost

The Myanmar Times - - International Business -

SAM­SUNG Elec­tron­ics flagged a 5.5 per­cent rise in op­er­at­ing prof­its, even as it strug­gles with a dam­ag­ing global smart­phone re­call and a share­holder push to split the fam­ily-run con­glom­er­ate in two.

In an earn­ings fore­cast that beat an­a­lyst es­ti­mates, Sam­sung said its op­er­at­ing profit for the July-Septem­ber pe­riod would stand at around 7.8 tril­lion won (US$7 bil­lion), com­pared to 7.39 tril­lion won a year ago.

The world’s largest smart­phone maker has had a tur­bu­lent time of late. Just weeks after the early roll­out of the Galaxy Note 7 “ph­ablet”, Sam­sung was forced in early Septem­ber to re­call 2.5 mil­lion units glob­ally fol­low­ing com­plaints its bat­tery ex­ploded while charg­ing.

With im­ages of charred phones flood­ing so­cial media, the un­prece­dented re­call was a hu­mil­i­a­tion for a firm that prides it­self as an icon of in­no­va­tion and quality – and the tim­ing of the cri­sis could not have been worse.

The Note 7 was meant to un­der­pin growth this year as Sam­sung strug­gles to boost sales, squeezed by Ap­ple in the high-end sec­tor and Chi­nese ri­vals in the low-end mar­ket, as profit has stag­nated.

The profit fore­cast, which comes ahead of au­dited re­sults to be re­leased this month, did not pro­vide a net in­come fig­ure or break­down of di­vi­sional earn­ings for the com­pany’s mo­bile, TV, semi­con­duc­tor and dis­play units.

It pre­dicted third-quar­ter sales of 49 tril­lion won, down from 51.7 tril­lion won a year ago.

An­a­lysts said the im­pact of the Galaxy re­call on the mo­bile divi­sion ap­peared to have been mit­i­gated by strong de­mand for mem­ory chips and OLED dis­play pan­els.

The world’s num­ber two chip­maker has dom­i­nated pro­duc­tion of faster, larger-ca­pac­ity chips us­ing a tech­nol­ogy called 3D NAND.

The US hedge fund El­liott Man­age­ment stirred the pot last week by un­veil­ing a pro­posal to stream­line Sam­sung, split the com­pany in two, dual-list the re­sult­ing op­er­at­ing com­pany on a US ex­change and pay share­hold­ers a spe­cial div­i­dend of 30 tril­lion won ($27 bil­lion). –

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