* Samsung to report Q1 operating profit, sales estimates
* Profit seen at 5 trln won; up 70 pct from yr-ago
* Most bullish view is for record 5.6 trln won profit
* Shares up 25 pct this year to record highs
By Miyoung Kim
SEOUL, April 6 Samsung Electronics,
the world's top technology firm by revenue, will report strong
first-quarter profit of around $4.5 billion on Friday on soaring
sales of its flagship Galaxy smartphones and the new Note, a
mini-tablet and phone.
Samsung, which raced to the top of the global smartphone
rankings last year with close to a fifth of the market, from
just 3 percent in 2009, should consolidate its position with
more product launches, including a revamped Galaxy S, over the
next few months.
Samsung, Asia's most valuable technology firm worth some
$190 billion, reports its January-March guidance ahead of
detailed quarterly results due on April 27.
January-March operating profit is seen at around 5 trillion
won ($4.4 billion), up 70 percent from a year ago, but down 6
percent from the preceding quarter's record 5.3 trillion won,
according to a consensus of 34 analysts surveyed by Thomson
Revenue is forecast at 45.5 trillion won.
"We hugely underestimated Samsung's smartphone performance
in the first quarter," said CLSA analyst Matt Evans, increasing
his profit forecast by 56 percent to 5.6 trillion won, the most
bullish market view.
"Our view that margins wouldn't significantly increase was
very wrong ... This strong performance has been driven by not
just higher than expected volumes but also increased dominance
at the high-end of the Android market, where there was little
new competition ... Samsung's smartphone shipments probably
exceeded Apple's by a significant margin."
Samsung's shipments are forecast at a record 44 million
smartphones in the first quarter just ended, up by nearly 25
percent from October-December levels, according to a Reuters
survey of analysts.
Analysts have been raising their Samsung profit estimates in
recent weeks to reflect the strong handset sales - 28 of 35
estimates have been revised in the past 30 days, pushing up the
average estimate by 13 percent, according to Thomson Reuters
Samsung introduced the Galaxy Note, a mini-tablet and phone
with a screen half the size of the iPad, in late October, and
the top-end model has quickly become its core profit earner.
Sales of the Note, which has revived the throwback stylus
function, have topped 5 million, increasing the competition
against Apple Inc and smartphone strugglers HTC
, Nokia and Research in Motion.
"Both smartphone shipments and profit growth are likely to
be much stronger than consensus. Sales of the Note were very
good and it's become Samsung's fresh money generator," said Lee
Seung-woo, an analyst at Shinyoung Securities, adding earnings
from just the Note and the Galaxy S could have topped 2 trillion
The handset division is likely to account for around two
thirds of Samsung's total profits, analysts forecast.
While Apple is Samsung's biggest rival in smartphones, the
U.S. company is also its biggest client, gobbling up Samsung's
high-end displays and microchips for its iPhone and iPad.
"Samsung's integrated business model - for instance, it
makes its own application processors and AMOLED screens - is the
biggest ingredient of its winning formula, which, in our view,
can't be easily copied," Daniel Kim, an analyst at Macquarie,
wrote in a research note.
Song Myung-sup, an analyst at HI Investment & Securities,
forecast Samsung's smartphone market share gains would
accelerate with the release, probably in June, of the next
version of the Galaxy S. "Its smartphone growth momentum will
continue at least until the end of the third quarter," he said.
Earnings prospects for memory chips, where Samsung is also a
world leader, have also brightened since Japan's Elpida Memory
filed for bankruptcy, prompting its customers to switch to
rivals such as Samsung and SK hynix to secure
supplies of the chips used in smartphones and laptops.
"Contract chip prices are likely to continue to rise in the
second quarter, possibly another 10-15 percent, as big customers
like Apple, Dell and HP may seek to increase
supply in the wake of Elpida's trouble," said Choi Sung-jae, an
analyst at SK Securities.
Samsung shares have risen by a quarter so far this year, and
hit a life high of 1.351 million won ($1,200) on Wednesday. Over
the same period shares in Apple have soared by more than half,
taking the California-based firm's value to above $582 billion -
more than three times that of Samsung.