Samsung announces record Q4 earnings guidance with strong chip sales

By Karthekayan Iyer | Published on 06 Jan 2017

Samsung announces strong Q4 earnings on the back of chip sales and demand for OLED display

Samsung announces record Q4 earnings guidance with strong chip sales

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Samsung may have failed with its Galaxy Note 7 last year but the company continues to offer better overall financial outlook. Samsung says its Q4 profit has jumped 50 percent from the same period last year. This is the highest gain in profit for the company in more than three years.

Samsung says the better than expected profit is primarily on the back of strong chip sales and rebound in smartphone sales. Post Galaxy Note7 debacle, Samsung said it anticipates a loss of $2.1 billion in operating profit. Samsung's upbeat outlook in profit comes in at a time when the smartphone industry is going through sluggish sales.

"Samsung posted solid earnings only with sales of older smartphone models like the S7 after the Note 7's discontinuation," Kim Sung-soo, a fund manager at LS Asset Management told Reuters.

Samsung says its operating profit for October-December period could have come in at 9.2 trillion won ($7.8 billion). The guidance comes in well above the street estimates of 8.2 trillion won.

A larger part of the record quarterly profits comes from strong chip sales and robust demand for OLED displays for smartphones. Samsung has a near monopoly in the 'organic light-emitting diode screens for smartphones' category. According to recent rumours, Apple is likely to switch to OLED panels for next-generation iPhone and Samsung will be the major supplier.

"Analysts expect Samsung's chip division to earn a record of more than 4 trillion won in operating profit in October-December thanks to strong demand from smartphone makers, including major client Apple Inc (AAPL.O), and high-end data storage products," reports Reuters.

Samsung booked most of its losses from Galaxy Note 7 aftermath in the third quarter of 2016. Samsung's profit may have soared, the company continues to pressure on the revenue side with a decline of 0.6 percent.

Karthekayan Iyer

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