Samsung Profit Below Estimates Predicted

Indobusiness - Samsung Electronics, the largest manufacturer of mobile phones and televisions in the world, estimated profits 'not as expected' in the period April to June this year.

Samsung predicts operating profit will reach 9.5 billion won, equivalent to 8.3 million million dollars. Most analysts expect the numbers could be higher reaching 10.1 billion won.

The success of mobile products is key to the growth of Samsung lately. However, there are fears that the growth rate will slow down despite new mobile phone models have been launched Click.

Samsung's stock price fell more than 2% after the estimate was announced. Since June, its share price has dropped even more than 15% after a broker downgraded its outlook lots of company.

"The slowdown in business phones seem to be worse than expected and disappointing results have reinforced the view that the market momentum is slowing the growth of Samsung mobile phones," said Lee Sei-chul, an analyst at Meritz Securities in Seoul.

Innovation

Samsung is enjoying great success in the mobile market in recent years. Popularity products 'Galaxy' fame has overtaken Nokia as the largest mobile phone manufacturer in the world last year.

According to research from Strategy Analytics, Samsung reap 95% profit of all Android-based mobile phone market.

But behind this success, there is concern that the pace of growth may slow down Samsung phones, the trend could eventually make a profit decline.

Earlier this month, Woori Investment & Securities in South Korea cut its earnings forecasts the tech giant. The move was followed by JP Morgan, Goldman Sachs, Merrill Lynch and others.

Concerns are also triggered by the launch of new products from rival manufacturers from China, which is relatively cheap.

Analysts say if Samsung wants to maintain a high growth rate, the company must create a new, more innovative products and reduce dependence on the mobile phone business to drive growth.

"One of the biggest risks for Samsung Electronics to go forward is that 70% of the total operating income derived from the business of mobile devices," said Jeff Kim of Hyundai Securities.

"Diversification is the key. Device 'that can be used' is the next phase in a saturated industry that needs constant innovation to survive.

"We will see flexible phones Click in the fourth quarter from Samsung and LG Electronics, Watch and iWatch and the Galaxy is expected to be one (an innovative device) is emerging as the first wave." (BBC)