* Samsung says earnings to improve from Q2 on smartphones,
* Q1 operating profit 8.5 tln won vs 8.4 tln won guidance
* Q1 smartphone mkt share fell vs yr ago, first time since
* Cash pile grows to 61.5 trln won from 54.5 trln won at
(Adds video link)
By Se Young Lee
SEOUL, April 29 Samsung Electronics Co Ltd
on Tuesday said it expected stronger earnings in the
second quarter as a pickup in sales of high-end televisions and
smartphones spurs growth, after it posted its second straight
fall in quarterly profit.
The South Korean tech giant said the football World Cup in
Brazil should help boost sales of screens and smartphones in the
current quarter, as fans splurge on up-market devices like ultra
high-definition (UHD) TVs to watch the action.
A revival of sales of upmarket TVs and smartphones is
crucial for Samsung to sustain growth, as its mainstay mobile
business, which generated three fourths of its first-quarter
profit, reported its first smartphone market share loss in four
But while sports-related demand should be positive, analysts
say the dearth of UHD-standard content and high prices could
limit the upside for sales of premium devices from the football
"Their handset shipments guidance suggests there will be low
single-digit growth for smartphone shipments for the second
quarter, which I think might be below street expectations," said
Maybank Kim Eng analyst Warren Lau.
Samsung said handset shipments in the second quarter should
be similar to 113 million seen in the January-March period,
though smartphones such as the Galaxy S5 should make up more of
the April-June shipments.
"Samsung is expected to see profits rally in the second
quarter and beyond, on the back of improved sales of display
panels and home appliances," Samsung said in a statement.
"Orders for display panels that are used for premium
smartphones and TVs are expected to increase, as new mobile
devices are rolled out into the market and as consumers look
forward to the upcoming World Cup in Brazil."
Shares of Samsung Electronics, worth $220 billion, were down
1.7 percent at midday, worse than a 0.3 percent fall in the
benchmark Korea Composite Stock Price Index.
For January-March, the world's biggest technology firm by
revenue said operating profit fell 3.3 percent from a year
earlier to 8.5 trillion won ($8.2 billion), versus guidance of
8.4 trillion won.
Profit in the mobile division was 6.43 trillion won, down
1.2 percent from 6.51 trillion won a year earlier.
The world's biggest smartphone maker is now banking on its
premium Galaxy S5 handset, launched earlier this month, to
outsell its predecessor and widen profit margins, a senior
executive told Reuters earlier.
The end of the heyday of smartphone innovation has left
Samsung - which posted five straight record quarterly profits
until the first quarter of 2013 - facing its first annual profit
fall in three years, according to analysts polled by Reuters.
The firm's broad range of low-end phones is being caught by
the improving quality of Chinese-made offerings, while the
large-screen advantage of its top-end phones is expected to come
under threat from Apple's next iPhone.
"Samsung continues to face tough competition from Apple at
the higher-end of the smartphone market and from Chinese brands
like Huawei at the lower-end," Neil Mawston at researcher
Strategy Analytics said.
Any further decline in profitability could increase
shareholder pressure on the company to produce a new growth
engine or lift payouts, though the company offered few details
about how it will use the 61.5 trillion won worth of cash and
other equivalents held at the end of the first quarter.
"The question is what the company can offer to answer
questions about where future growth will come from," said Park
Jung-hoon, a fund manager at HDC Asset Management.
In the chip business, profits jumped 82 percent from a year
earlier to 1.95 trillion won, in line with similarly strong
results from rivals such as SK Hynix Inc thanks to
solid demand from PC makers and tight supply.
($1 = 1035.1500 Korean Won)
(Editing by Stephen Coates)