Samsung Electronics is banking on surging smartphone sales and a recovery in its memory chip business to help it rebound from a fourth-quarter profit dip, while slugging it out with global rivals to sell a new generation of TVs.
The world’s biggest maker of flat screens and memory chips, which on Thursday estimated fourth quarter profit to come in below market expectations, is pinning its hopes on cut-rate prices stabilizing in the chips and panel sectors.
Analysts expect Samsung’s weakest profit estimate in six quarters to remain a short-term blip and improve in the next few quarters.
After a slow start, Samsung is emerging as a credible challenger to Apple with its Galaxy S high-end smartphone, powered by Google’s Android software. Samsung’s Galaxy Tab is also seen by some analysts as the strongest rival to Apple’s blockbuster iPad tablet.
“Samsung has successfully expanded into the smartphone and tablet PC segments,” said Ahn Young-hoe, a fund manager at KTB Asset Management.
“Samsung is a totally different story compared to pure chip and display plays. Its diversified portfolio creates stable profits in the cyclical businesses.”
At the Consumer Electronics Show in Las Vegas, Samsung also signaled an aggressive push into “smart” and 3D TVs this year as it aims for a 15 percent jump in TV sales in 2011.
Samsung, the first major global technology firm to flag preliminary quarterly results, said its expects its operating profit to come in at 3.0 trillion won for October-December, lower than a consensus forecast of 3.4 trillion won, the figure it reported for the same period in 2009.
“…Only Samsung can rival Apple in tablets and smartphones,” said Kim Young-Chan, analyst at Shinhan Investment Corp. “We think these segments will continue to grow. Earnings at Samsung hit the bottom in the fourth quarter.”
Shares in the company, which has a tradition of beating even the most bullish estimates, fell 1 percent to underperform the Seoul market.
Samsung has become a top global brand in the space of 10 years and now boasts a market value of $136 billion, equal to the combined value of Sony Corp, Nokia, Toshiba Corp and Panasonic Corp.
Its shares have jumped 25 percent since November and hit a record high on Monday on expectations of a recovery in profits. Out of 46 analysts tracking Samsung, 44 have a buy or strong buy.
Samsung has held on to its No.1 slot in TVs against Sony and Panasonic and is performing strongly over U.S. chip rival Micron Technology. The firm aims to double its smartphone shipments in 2011 to more than 50 million units.
