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Will Samsung bounce back in Q4?

October 30, 2014

A student tries out Samsung Electronics’ Gear products at one of the technology giant’s shop in Seoul, Thursday. Samsung Electronics has recently vowed to overhaul its handset lineup as its smartphone sales are on the decline amid tougher competition from Apple and Chinese rivals. (AP)

By Kim Yoo-chul

Samsung Electronics said Thursday that chances of the company seeing any substantial improvement in earnings in the fourth quarter were small as it needs to revamp its mobile business.

Samsung reported 47.4 trillion won in sales for the third quarter, down 9.3 percent from a quarter earlier. Operating profit fell 43.5 percent to 4.06 trillion won and net profit came in at 4.22 trillion won, down 32.45 percent.

“We have to admit that Samsung failed to respond to the new market order in smartphones, with profits sliding for the second straight quarter,” Robert Yi, chief of the firm’s investor relations team, said in a conference call to investors and analysts. “Our new focus is how to maintain a double-digit profitability.”

Kim Hyun-joon, a senior executive at its mobile division, said the outlook for the fourth quarter in smartphones “wasn’t looking good” as competition will get fiercer. “That will probably hurt our profitability,” Kim told analysts.

Samsung sold 120 million mobile phones for the July to September period, with the portion of smartphones dropping to below 80 percent.

Still, the company painted a relatively positive outlook for its memory chip business.

“Samsung sees more demand in memory chips thanks to the rising demand for less-pricey smartphones. We will focus on supplying more mobile DRAM chips and solid state drives using the three-dimensional V-NAND technology from the fourth quarter,” Yi said. “That will help our memory chip business improve earnings.”

Samsung was also positive about its TV segment, citing seasonal factors.

“In the fourth quarter, we aim to sell at least 15 million TVs, up from 12 million a quarter earlier,” said Sung Il-kyung, an executive affiliated with the business.

Samsung said it will consider paying out dividends to boost its stock price.

“We are considering steps to return profits to our shareholders after checking shareholders’ demand,” Yi said. “We will announce our dividend policy when announcing fourth quarter results.”

On the Seoul bourse, Samsung Electronics closed up 4.51 percent at 1.181 million won, boosted by hopes that the company may boost dividends.

The benchmark KOSPI closed down 2.24 points or 0.11 percent at 1,958.93.