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SEOUL (Reuters)-the profit to Samsung Electronics, the largest producer of memory chips and televisions, fell by a quarter as weak earnings to its flat screen unit, below the fight dragged conglomerate to return record profits last year.
A bleak Outlook for computers and televisions and a shaky global economy is overshadowing strong sales of the new version of its smartphone Samsung Galaxy S flagship, which emerged as a major competitor of the Apple Inc. iPhone blockbuster.
Samsung, one of the first major global technology companies to kick off quarterly earnings, is expected to have become the world's best smartphone vendor in the second quarter, ending more than 10 years of Nokia.
"(Forecast) is slightly better than what the market had been expecting as many were reducing their forecasts recently due to losses from LCD (liquid crystal display)," said Kim Young-chan, an analyst at Shinhan Investment Corp..
"It will be new smartphone that will lead the recovery earnings in the second half of this year, although the competition can get harden again in the third quarter when Apple introduces a new iPhone."
Samsung shares closed 2 percent lower, underperforming an increase of 0.4 percent of the market. The shares, which have a recommendation to "keep" and not "sell" ratings among 46 analysts tracking company, rose nearly 9 percent so far this month, an increase of 3 percent of the broader market.
"Optimism for the second half is somewhat reflected in its recent move to altitude and now investors are little concerned about falling chip prices," said Kim Sung-in, an analyst at Kiwoom securities.
Samsung has a market capitalisation of $ 134 billion, plus the combined value of Sony Corp., Toshiba Corp., Nokia, Panasonic Corp. and LG Display.
Samsung, which worked out how to make black and white TV in the 1970s by tearing Japanese models, overtook Sony as a consumer electronics brand more popular in the world in 2005.
On Thursday, Samsung estimated its quarterly profit at 3.7 billion won ($ 3.5 billion), compared with a consensus forecast of 3.9 billion won by analysts surveyed by Thomson Reuters I/B/E/s. operating
That would be down 26 percent from a record trillion 5.01 won a year ago and 25 percent from the previous quarter.
The profit was expected to show a surprise downside of 6 per cent to 3.6 billion won, according to Thomson Reuters SmartEstimates, which places more weight on recent forecasts by analysts top rated. Samsung will provide detailed quarterly results this month.
"I think the operating profit figure, which is not bad and the stock market cannot display this as a negative signal," said Chun Nam-Joong, Fund Manager at Conso Asset Management. "However, in the third quarter, it is difficult to expect the swing LCD business profit and the memory chip business cannot grow strongly."
In its chip business, Samsung pillar should lose his leadership expedition second quarter an increase in the percentage of mid-teen for DRAM chips used in computers and a more than 30 percent of income for NAND chips used in cellular phones and tablets.
Demand for personal computers is slowing and smartphone production was crimped by the earthquake in Japan in March.
RISING LCD PHONES, WEAK
Business handset of Samsung, which saw its profit halved just a year ago due to a lack of interesting products to compete against the iPhone, staged a strong comeback to become the most important profit center.
The Galaxy S II has sold over 3 million units since its debut in late April. Some analysts expect the phone running on Google's Android platform to become best ever Samsung model with potential sales of 20 million units this year.
Samsung smartphone may have sold 19 million in the second quarter in total and easily would beat its goal of selling smartphone 2011 to 60 million units, analysts said.
The company's largest drain on earnings remains its underperforming business LCD. The vies for top position with rivals of LG Display. Each company has about a quarter of the global market, which is grappling with the question of oversupply and weak.
Reflecting a growing urgency to turn around business, Samsung recently appointed the head of its semiconductor business to take over from Chief Chang Wonkie LCD and combined operation with the underperforming chip Division.
"The same LCD business is likely to report a loss in the third quarter again. But factoring in earnings from Samsung Mobile Display, probably will send a slight profit, "said Kang Jeong-won, an analyst at daishin securities.
The restructuring is also aimed at improving commercial relations with customers as Samsung component is involved in legal disputes with Apple on their smartphones and tablet of flagship of escalation.
This week, Apple, the largest customer of Samsung, has filed a complaint of Commerce U.S. to block Samsung to import a variety of electronic devices, less than a week after Samsung has tried to stop imports of iPads Apple's popular iPhone.
(Additional reporting by Jin, Hyun Joo Yeon-hee Kim and Ju-min Park; Editing by Jonathan Hopfner Hopfner and Gangadhar Daga)
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