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Samsung is earning big despite smartphone flop

Samsung Electronics beat analysts' expectations and posted its first quarterly profit gain in two years, which prompted a rise in its shares, as well.

According to multiple media reports, strong sales of chips and displays most likely mitigated the company's weaknesses in the smartphone industry.

According to a Reuters (opens in new tab)report, Samsung Electronics estimated its July-September operating profit would jump 79.8 per cent from a year earlier to 7.3 trillion won (£4.11 billion), compared with a 6.7 trillion won profit tipped by a Thomson Reuters SmartEstimate poll of 30 analysts.

Analysts believe the success should be largely attributed to the weakining of the won, however the South Korean tech giant's shares saw its biggest daily percentage gain in nearly four years.

"There were worries that overall earnings will continue falling as mobile profits declined, but now the numbers make the case that Samsung has the capacity to withstand weakness from the mobile business," IBK Securities analyst Lee Seung-woo said.

Shares of Samsung Electronics closed up 8.7 per cent, its biggest daily gain since January, 2009. According to Business Insider (opens in new tab), Samsung is expected to give some of the cash to its shareholders, which further fueled the share rise.

This is a good sign for the South Korean company, showing a path to recovery, but the competition from Apple, Huawei and Xiaomi is still fierce.

Fourth quarter operating profit would probably ease sequentially due to higher smartphone marketing bills ahead of the year-end holidays, HDC Asset Management fund manager Park Jung-hoon said.

According to Financial Times (opens in new tab), analysts don't expect a significant rebound in smartphone profits before 2017.

Sead Fadilpašić
Sead Fadilpašić

Sead Fadilpašić is a freelance tech writer and journalist with more than 17 years experience writing technology-focussed news, blogs, whitepapers, reviews, and ebooks. And his work has featured in online media outlets from all over the world, including Al Jazeera Balkans (where he was a Multimedia Journalist), Crypto News, TechRadar Pro, and IT Pro Portal, where he has written news and features for over five years. Sead's experience also includes writing for inbound marketing, where he creates technology-based content for clients from London to Singapore. Sead is a HubSpot-certified content creator.