Shares in Samsung soar after unexpectedly big third-quarter profits

Compared to the third quarter of 2014, when earnings were poor due to lackluster sales of the Galaxy S5 smartphone, sales were up 7.5 percent and operating profit skyrocketed 79.8 percent. On October 7, Samsung Electronics announced that its operating profits for the third quarter jumped to an estimated 7.3 trillion won (US$629.2), based on a consolidated financial statement. And a recent weakening of the South Korean currency, won, also helped boost profits since most sales of semiconductors and display panels to emerging markets are settled in dollars, analysts said.

The third-quarter operating profit prediction beat the estimate of 6.7 trillion won given by analysts surveyed by Bloomberg News.

As usual, the company provided preliminary highlights of its results and will publish the full, official figures, including net income and divisional breakdowns, later in the month. Samsung was the only smartphone vendor in the top five of IDC’s rankings to lose market share year-over-year in the second quarter. “The chips and display units outperformed the product divisions, largely helped by the weaker Korean won”.

Shares of the company closed up 8.7%, its biggest daily gain since January 2009. Officially, its third quarter results will be published towards the end of this month. “Analysts will now have to revise up their estimates, and it’s been a while since they’ve done that”.

“Samsung’s [third-quarter] earnings surprise, despite internal and external difficulties, should be highly appreciated”, said Lee Ka-keun, an analyst at KB Investment & Securities.

The new Samsung phones are sold with a rebate of up to $120 through select carriers in the US, with an extra benefit for customers switching from iPhones-an aggressive attempt at maintaining its share in the USA market while seeking to expand the adoption of its recently launched mobile payment service, Samsung Pay.

In August, it introduced two new flagship phones – the Galaxy Note 5 and the Galaxy S6 Edge Plus.

Samsung Electronics Co Ltd, which makes up 13 per cent of the main bourse’s market value, rose as much as 3.6 per cent to a two-week high ahead of its earnings guidance expected to be released early on Wednesday. The company shipped 72m units in the previous quarter.

Since family patriarch Lee Kun Hees heart attack a year ago prompted his son to take on more of a leadership role, Samsung Electronics shares are on their longest losing streak in more than three decades.

On the component front, the company’s advanced displays called OLED likely generated a fat profit because more Samsung handsets adopted those screens.