Samsung Reports Q3 profit

Samsung Electronics reported Q3 operating profit of $4.5 billion.  Samsung is down 30 percent on the year but is in line with guidance that the company released earlier this month.  Net profit dropped over 16 percent.  Samsung recorded increased sales of high end products in its component business that creates memory chips and display panels which off-set its failure in the mobile business.  The failure in the mobile business was due to the recall of the Galaxy Note 7 phone.

The company reiterated that the strong demand for memory chips and display panels aided in keeping operating profits above water.  Samsung expects earnings from the components business to improve in the quarter from October to December. 

Its IT and mobile communication division failed to meet expectations due to the massive recall and discontinuation of the latest Galaxy Note 7 smartphones.  The phones were initially recalled due to the devices catching fire. 

Future guidance

Samsung expects demand for smartphones and tablets to increase in Q4 and are looking to achieve mobile business operating profits of $1.95 billion, equivalent to operating profits a year ago.  Patrick Moorhead, president and principle analyst at Moor Insights & Strategy stated that the Note 7’s failure would not disrupt Samsung’s holiday season sales because it was not a big factor overall in the earnings report.  “I think what people forget is just how small of a percent the Note 7 sales are and that’s why we are not going to see the big hit in the fourth quarter,” he said.  

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