Samsung Elec fourth quarter guidance underscores tech sector headwinds

Thu Jan 7, 2016 8:40pm EST
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By Se Young Lee

SEOUL (Reuters) - Tech giant Samsung Electronics Co Ltd said on Friday its fourth-quarter operating profit likely rose 15 percent from a year earlier, missing expectations and fuelling concerns the tech industry may be in for a tough year of slack gadget sales.

Slowing economic growth in China and weaker emerging market currencies are undercutting sales of consumer electronics and gadget components, spelling trouble not only for smartphone market leaders Samsung and Apple Inc but for their suppliers and the broader industry.

Samsung said in a regulatory filing its October-December operating profit would likely be 6.1 trillion won ($5.10 billion), compared with a 6.6 trillion won Thomson Reuters SmartEstimate derived from a survey of 30 analysts. Revenue likely rose 0.5 percent to 53 trillion won, the firm said, without elaborating.

"Semiconductor earnings were weak and the smartphone industry entered a phase of low growth," KTB Investment analyst Jin Sung-hye said.

Even so, Samsung shares were up 1.8 percent as of 0124 GMT (2024 EDT), outperforming a 0.1 percent rise for the broader market.

"I think Samsung did well considering the weaker tech demand," Jin said.

Shares of the world's No.1 maker of memory chips and smartphones touched a three-month low on Thursday as investors braced for downside risks, with some brokerages having tipped profit to have fallen as low as 6 trillion won.

The guidance was not a major surprise as Samsung Chief Executive Kwon Oh-hyun had warned on Monday that the maker of Galaxy smartphones faced a challenging time ahead due to weak global economic growth.   Continued...

A man tries out a Samsung Electronics mobile device at its headquarters in Seoul, South Korea, January 6, 2016.  REUTERS/Kim Hong-Ji