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Samsung Electronics likely to suffer another earnings shock in Q3: brokerages

All Headlines 10:10 September 14, 2014

SEOUL, Sept. 14 (Yonhap) -- Samsung Electronics Co., the world's largest mobile phone manufacturer, is expected to suffer another earnings shock in the third quarter, mainly due to weak demand for its new products and stiff competition from rivals.

Local brokerages initially forecast operating profits for the July-September period to be in the 6 trillion won (US$5.8 billion) range, but some like IBK Securities Co. marked down their assessment to around 5 trillion won with a corresponding dip in sales after the five-day Chuseok holiday in early September.

If operating profits fall into the 5 trillion won range, it will mark the lowest ebb since the 5.7 trillion won tallied for the first quarter of 2012.

Many market analysts also expected sales to fall below the 50 trillion won mark for the three-month period, down from an earlier number of over 51 trillion won.

IBK Securities said Thursday that Samsung's third-quarter operating profit could drop to as low as 5.2 trillion won, with sales hitting 49 trillion won.

Others such as BS Securities Co. and Samsung Securities Co. predicted sales of 49.8 trillion won and 50.5 trillion won, each, with operating profits hitting 5.7 trillion won.

The downgrades come as Chinese mobile phone makers have started to challenge Samsung in lower price tier areas, particularly in their home market, while Apple Inc. has launched its new iPhone 6 and iPhone 6 Plus phones that encroach into the large screen arena that was pioneered by the South Korean tech giant. Lower-than-expected weak sales of its flagship Galaxy S5 launched earlier in the year have affected market outlook for the company.

Samsung reported operating profits of 7.2 trillion won in the second quarter, marking the first time in eight quarters that its profits failed to surpass the 8 trillion won mark. The numbers were viewed as an earnings shock by the market as a whole.

The drop in earnings caused prices of Samsung Electronics stocks, which stood at 1,295,000 won when the company announced its second quarter earnings on July 8, to fall to 1,192,000 won as of Thursday, representing a 8 percent drop in value.

<YNAPHOTO path='C:/YNA/YNACLI~1/Down/Article/AEN20140914000400320_01_i.jpg' id='' title='' caption='Samsung Group&apos;s main headquarters in southern Seoul (Yonhap file photo)'/>


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