Samsung sees third quarter profit jump as chip surge eases smartphone recall blues

Thu Oct 6, 2016 11:06pm EDT
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By Se Young Lee

SEOUL (Reuters) - South Korea's Samsung Electronics Co (005930.KS: Quote) expects third-quarter profit grew 5.6 percent, beating estimates, as a pickup in chip and display earnings likely offset the impact of a global smartphone recall that has roiled the tech giant.

The world's biggest smartphone maker said in a brief filing on Friday its operating profit for July-September was likely 7.8 trillion won ($7 billion), compared with the 7.4 trillion won tipped by a Thomson Reuters StarMine SmartEstimate of analysts' forecasts. A year earlier operating profit was 7.4 trillion won.

The firm won't issue full results until late October and gave no details on the cost of recalling about 2.5 million Galaxy Note 7 phones after batteries caught fire. Analysts have said the Note 7 woes - rumbling on with Wednesday reports of a smoking battery in a replacement device - could have undercut mobile earnings by at least 1 trillion won.

Revenue for the quarter likely fell 5.2 percent to 49 trillion won, the South Korean firm said, less than the Thomson Reuters StarMine SmartEstimate of 51.1 trillion won.

"Obviously the Note 7 recall costs were reflected but (business) segments such as memory and OLED (organic light-emitting diode) displays did well and will probably continue to do so until at least next year," said IBK Asset Management fund manager Kim Hyun-su.

Samsung's semiconductor business - the world's top memory chip maker - is thriving as Apple Inc (AAPL.O: Quote) and peers boost the global market, seeking chips for new iPhones and other products launched ahead of the peak year-end sales season. Germany's Dialog Semiconductor Plc (DLGS.DE: Quote), an iPhone chip supplier, said on Thursday its revenue beat expectations.

NOTE 7 CHIP BOOST?   Continued...

An employee works at Samsung Electronics' headquarters in Seoul, South Korea, October 5, 2016. REUTERS/Kim Hong-Ji