Positive Galaxy S6 Reception Helps Samsung Beat Revenue Estimates
Samsung saw a significant earnings drop last year, but says it is headed for a turnaround driven by new smartphone models
Samsung reported stronger-than-expected provisional earnings figures for the first quarter, boosted by a favourable reception for its flagship Galaxy S6 smartphones, which go on sale from Friday.
The world’s biggest technology company by revenue said on Tuesday it expects an operating profit for the quarter ended 31 March of around 5.9 trillion won (£3.6bn), down 31 percent from 8.5tn won in the same quarter a year ago but up from 4.1tn won in the third quarter of 2014.
Analysts had expected 5.3 trillion won on average, according to a Thomson Reuters survey. Detailed results are expected later this month.
Galaxy S6 anticipation
Samsung’s Galaxy S6 and S6 Edge smartphones, introduced on 1 March in Barcelona, received a better critical response than last year’s Galaxy S5, which was considered little changed from its predecessors. Researcher Counterpoint expects the devices, one of which features a wraparound screen, to sell more than 50 million units, which would be a new record for the company.
Samsung lost smartphone market share last year but still leads in global market share. The company’s market valuation reached their lowest levels in two years last October, when the company lost significant share to Chinese smartphone competitors such as Lenovo and Xiaomi.
The improvement comes in the first quarter, which tends to be seasonally weaker, leading to higher expectations for the rest of the year, according to analysts.
Chip growth
The company’s microprocessor business is likely to have achieved higher revenues than smartphones for a third quarter in a row for the quarter, according to analysts, with the expansion of Samsung’s system-chip business. Samsung added Nvidia as a contract manufacturing client and has begun using more of its own chips in the Galaxy S6.
Samsung has also added mid-tier handsets such as the Galaxy A and E models in the first quarter, which is likely to have helped boost shipments, according to analysts. The devices are intended in part to win back share in emerging markets such as China.
The company is expected to see further chip growth in the third quarter of this year when it begins producing processors for the next version of Apple’s iPhone, according to a number of reports citing sources with knowledge of the matter.
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