Despite the ongoing problems with its Galaxy Note 7 smartphone, Samsung Electronics will beat its profit estimates for the third quarter of 2016.
The company recently published its Q3 earnings guidance in which it expected an operating profit of around $7 billion with total sales coming in around $44 billion. This is an increase of $3.6 million when compared to its profits from the same quarter last year.
Samsung's figures may have been able to beat analyst estimates but the Note 7 recall has certainly affected its business. During the period from July to September, overall sales have been lower than analyst projections likely as a result from its Note 7 line of smartphones. The sales of its latests flagship smartphone were drastically reduced as a result of continuing problems related to the device's internal battery that has been known to explode when charging.
Samsung's numbers still project a year-on-year increase though the company could have performed better as it is coming off its largest quarterly profit of the last two years. Chung Chang, an analyst at Nomura Holdings, pointed out that “Samsung was originally expected to perform better and better this year.”
However, the costs of the Note 7 recall have jeopardised its success this year. Despite the company's mobile division facing difficulties, its overall profits have been raised by its other businesses in particular its semiconductor division which did remarkably well. This was in part due to an increase in semiconductor prices over the past few months.
Lee Seung-woo, a Korean analyst at IBK securities, noted that Samsung may be able to continue its success streak if it can overcome the Note 7 fiasco, saying: “If its mobile unit doesn't get into further trouble from here and given the strong performance of its components businesses, Samsung shares will continue its upward march.”
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