Samsung upbeat on profits as smartphone sales fly

Samsung Electronics said its quarterly profits should top the most bullish market forecasts, with smartphones becoming its main profit engine despite intense competition from bigger rival Apple.

Indeed, analysts expect Samsung to report record profit from handset sales in the third quarter and overtake Apple as the world's biggest smartphone vendor in unit terms.

The South Korean firm estimated its quarterly operating profit at 4.2 trillion won (£2.2Bbn) versus a consensus forecast of 3.4 trillion won by analysts surveyed by Thomson Reuters. That would be down 14 per cent from a year ago but up 12 percent from the preceding quarter.

The estimate
was higher than even the most bullish street view of 3.95 trillion won. Detailed earnings for July to September will be released later this month, Samsung said.

"Samsung's estimates are far better than expected," said Park Jong-min, a fund manager at ING Investment Management. "Its telecommunications business is seen very positive as shipments of smartphones and other high-end handsets expanded."

Investors are looking for signs the telecoms business can sustain strong growth for the year-end holiday season as its flagship Galaxy line of smartphones and tablets squares off against Apple's new iPhone, which goes on sale next week.

Stellar growth and strong profit margins from its telecom business mark a big transformation for a company, which has relied for years on its mainstay computer memory chips to boost profit. It had a negligible share of the smartphone market until early last year.