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Samsung likely to offset smartphone losses with strong chip biz in Q2
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IANS | 29 Jun, 2020
Samsung Electronics is expected to announce better-than-expected
earnings guidance for its second-quarter next week, based on its robust
chip business that would offset losses in its smartphone and display
businesses amid the novel Covid-19 pandemic.
Samsung is expected
to log 53.39 trillion won (US$44.4 billion) in sales in the April-June
period, down 5.5 percent from a year earlier, while operating profit was
estimated to drop 2.3 percent on-year to 6.44 trillion won over the
period, according to data compiled by Yonhap Infomax, the financial news
arm of Yonhap News Agency.
Samsung, the world's largest memory
chip and smartphone vendor, earlier expected weak second-quarter
earnings, citing the impact of the Covid-19 pandemic on advanced markets
like the US and Europe.
In the first two weeks of June,
analysts expected Samsung to post only 50 trillion won in sales and
operating income around 6 trillion won.
"Despite earnings decline
from its mobile business and widened losses from its display business,
Samsung could post estimate-beating earnings results due to a rise in
memory chip prices," Lee Seung-woo, an analyst at Eugene Securities, was
quoted as saying.
According to market tracker TrendForce, global
server shipments in the second quarter are expected to post a 9 per
cent increase from three months earlier due to increased
non-face-to-face activities including teleconferencing and media
streaming.
Analysts predicted that operating profit from
Samsung's chip business will exceed 5 trillion won in the second
quarter, up from 4 trillion won three months ago.
However,
Samsung's display business was expected to stay in the red, with its
losses further widened due to a decline in smartphone and TV demand.
Analysts
also estimated a sharp earnings drop in Samsung's mobile business in
the second quarter due to sluggish sales of the company's high-end
Galaxy S20 smartphone series.
Some industry watchers have
expected operating income of Samsung's mobile business in the second
quarter to fall by at least 1 trillion won from the previous quarter.
But
the earnings forecast for Samsung's mobile business was still better
than analysts' early estimates as they pointed out global smartphone
demand has shown signs of a recovery from June.
"We are raising
Samsung's smartphone sales estimate from 50 million units to 55 million
units in the second quarter," said Kim Kyung-min, an analyst at Hana
Financial Investment.
Samsung was estimated to have sold 59
million smartphones in the first quarter, according to industry tracker
Counterpoint Research.
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