Samsung Electronics forecasts fourth-quarter profit at over three-year high

REUTERS : Samsung Electronics Co Ltd  said on Friday its fourth-quarter profit likely leapt 50 percent from a year earlier to its highest level in more than three years, beating expectations on strong chip sales and a smartphone rebound.

 The upbeat outlook comes despite a slight fall in revenue and the anticipated $2.1 billion profit hit from the withdrawal of the fire-prone Galaxy Note 7 premium smartphone in October.

The guidance points to a more rapid recovery for the mobile business than many analysts had anticipated after one of the biggest product safety failures in tech history, and reflects steady price increases for memory chips.

"Samsung posted solid earnings only with sales of older smartphone models like the S7 after the Note 7's discontinuation," said Kim Sung-soo, a fund manager at LS Asset Management.

"This makes me have hopes for the (Galaxy) S8. Should they fare well, I expect Samsung to report record earnings this year."

The world's biggest maker smartphones, TVs and memory chips will not disclose detailed earnings, including the performance of its individual businesses, until late January.

Analysts expect Samsung's chip division to earn a record of more than 4 trillion won in operating profit in October-December thanks to strong demand from smartphone makers, including major client Apple Inc, and high-end data storage products.

More: Samsung expects a rise in profit thanks to chips and OLED

The Korean conglomerate's mobile division also bounced back after Note 7's fiery death.

According to the Korean chaebol's earnings forecast for October to December last year, its operating income for the fourth quarter was 9.2 trillion won ($7.8 billion). That's 50 percent larger than the income posted for the same period in 2015 and the highest since the third quarter of 2013, thanks mostly to its its strong chip and OLED sales.

The company’s display division probably posted a profit of 1.1 trillion won. The proliferation of OLED screens should help in coming quarters: Apple is said to be planning to adopt the technology in at least one new iPhone later this year.[Bloomberg]