Smartphones ease Samsung to record Q1 resultsSamsung Electronics posted a record-high operating profit of 5.85 trillion won ($5.15 billion) in the first quarter on the back of brisk sales of its Galaxy smartphones and home appliances. This was almost double its result posted a year earlier.
“Operating profit in every division except for semiconductors improved in the first three months,” Robert Yi, Samsung Electronics’ vice president and head of investor relations, said yesterday. “Surging smartphone and LED TV sales were the biggest contributing factors.”
The company’s IT and mobile communications division, which produces handsets, laptops and cameras, racked up an operating profit of 4.27 trillion won for on-year growth of 193 percent. The division accounted for 70 percent of the company’s total operating profit for the quarter.
Samsung said in February that it plans to double sales of smartphones and tablet computers this year, helped by new products including its Galaxy S3, the highly-anticipated successor to the Galaxy S2.
However, operating profit from its semiconductor business in the quarter ended March 31 stood at 760 billion won, a more than 50 percent drop from one year earlier.
“Earnings [in semiconductors] declined amid decreasing prices of major products,” said Kim Myung-ho, another vice president at the leading Samsung subsidiary.
On news that the earnings results beat analysts estimates, Samsung closed up 2.5 percent at 1,374,000 won, eclipsing its previous record high of 1,335,000 won set on April 3. The stock shot up as high as 1,383,000 won during yesterday’s trading session.
The closing price propelled Samsung’s market cap to 202 trillion won, surpassing 200-trillion-won mark for the first time in its history. The amount bests that of all other listed firms in Korea, and its market cap translates to around $180 billion. Although this is still just a third of Apple’s $566.6 billion, and two-thirds of Microsoft’s $270 billion as of Thursday (U.S. time), it has beaten rivals Nokia ($13.8 billion) and Sony ($16.5 billion).
Some experts forecast the momentum will persist in coming years. Hwang Min-seong, an analyst with Samsung Securities, said recently that Samsung’s market cap will reach 300 trillion won in five years. “Samsung is an exemplary producer in terms of its hardware ecosystem,” he said.
On April 9, three days after Samsung released its first-quarter earnings guidelines, Daishin Securities raised the target price for Samsung shares to 2 million won, the highest among all securities firms. The projection from Meritz Securities is 1.7 million won, while E-Trade and HMC Securities firms each had the number at 1.6 million won.
By Seo Ji-eun, Bloomberg [email@example.com]
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