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SEOUL (Reuters)-Samsung Electronics, the world's top producer of memory chips and televisions, it is likely that report significantly below second quarter earnings this week, hit by a loss on its LCD display unit and as weak demand for computer hit sales of its semiconductors.
Strong sales of a new version of its flagship Galaxy S smartphone, however, may have saved the company of South Korea by a third consecutive decline in quarterly profits. Samsung could emerge as the best smartphone supplier in the world, more than Nokia overtaking 10 year reign.
Recovery of Samsung's earnings will likely slow because of its flat screen business and a bleak outlook falls short for computers and television sets in the second half.
"There will be little seasonal demand usual Boost in second half of this year as producers carried out their right of toni dynamiche sound of inventory after the earthquake of Japan for fear of more narrow parts supplies," said Lee Min-hee, an analyst at Dongbu securities.
"The prices of the component had a temporary withdrawal in the second quarter due to unusual and restocking activities which will lead to demand relatively lackluster component even before the summer season. Producers are also concerned about the uncertain economic Outlook, keeping the overall demand for televisions and computers weak, "said Lee.
The company's largest drain on earnings remains its LCD business underperforming. The vies for top position with rivals of LG Display. Each company has about a quarter of the global market.
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 restructuring reflects two main headaches of Samsung LCD business-how to restructure, which is now entering a phase of growth lower due to chronic oversupply and slow the growth in demand from manufacturers of flat screen TV and how best to deal with clients of the component," said Lee tae Sun, an analyst at Meritz securities.
"Patent litigation from the likes of Apple, which are the main clients of Samsung, but also in direct competition with it in areas such as PCS, TVs, and Smartphones, have raised business risks for its component operations," said Lee.
Samsung, the most valuable technology company in Asia, with a market value of about $ 134 billion, is due to report guidance April-June on Thursday or Friday before announcing quarterly results as detailed at the end of July.
It is likely that report 3.9 billion won (3.7 billion dollars) in operating profit for April-June on revenues of trillion won, according to 40.3 consensus of 32 analysts interviewed by Thomson Reuters I/B/E/s.
According to StarMine SmartEstimates, which places more weight on recent forecasts by analysts rated, operating profit of Samsung can show a surprise downside of 6 percent to 3.67 billion won. That would be down 27 percent from 5.01 trillion won a year ago but the record 24 percent compared to the previous quarter.
Analysts expect Samsung to lose its second-quarter guide the shipment of an increase in the percentage of mid-teen for the DRAM chip and a gain of over 30 per cent for NAND chips due to weak demand for PCs and Smartphones because production was crimped by the earthquake in Japan in March.
Search companies are reducing estimates global PC shipment, which grew by double digits in recent years except for 2009. They are now single digit growth forecast this year due to economic uncertainty, as well as the lack of convincing PC products.
UBS expects PC DRAM (dynamic random access memory) chips, memory chips, Samsung's main refuse other 15-20 percent in the second half of this year. Samsung controls about 40 percent of the global DRAM market.
BACK IN THE SMARTPHONE GAME
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.
Samsung Galaxy S II, the sequel of his flagship smartphone Galaxy S, has sold more than 3 million units since its debut in late April. Some analysts expect the ultra slim phone running on Google's Android platform free to become a best ever Samsung model with potential sales of 20 million units.
Samsung may have sold 19 million smartphones in the second quarter and easily beat its goal of selling smartphones in 2011 60 million units, analysts said.
"Smartphone shipments would have jumped 67 percent over the previous quarter and topped market estimates ... because there were few products on the market that can match Galaxy S II as Apple seems to be delaying the new iPhone debut due to interruptions in the supply of parts, while Nokia continues to fail to introduce the competitive," said Jin Sung-hye, an analyst at Hyundai Securities.
Analysts widely expect to tear the place Samsung No. 1 ranking in global smartphone from Nokia struggling in the second quarter and nearly double the market share this year to about 17 percent from a year ago.
Samsung should maintain strong profit growth from sales of smartphones in the second half introduces the sequel to Galaxy S in North America and expands sales of 10.1, that Galaxy Tab is thinner than Apple iPad 2 and carries the same retail price of U.S..
In the mid segment smartphone, Samsung is pushing for changes in the Galaxy, as the ACE and Mini, a market that Apple has ignored so far. Samsung wants to Boost its deliveries in volume and lift the part of the most lucrative segment in its portfolio of portable.
($ 1 = 1065.250 Korean won)
(Edited by Matt Driskill)
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