Samsung Electronics faces grim Q3 earnings outlook

Samsung Electronics Co., the world's largest handset maker, is expected to post worse-than-expected earnings in the third quarter due to worsening profitability from its mobile division, analysts said Sunday.

The earning guidance by 22 brokerage houses averaged at 6.61 trillion won ($5.68 billion) as of Sept. 17, 6.4 percent down from the estimate a month earlier, according to the data compiled by corporate researcher FnGuide.

"The operating profit in the IT and mobile division is expected to hover below the previous expectation by 12 percent in the third quarter," Lee Jae-yoon, a researcher at Yuanta Securities Korea, said. "Although the total number of smartphones sold during the period is expected to rise, it won't help profitability because the growth is mostly focused on low-ended budgets."

Others projected a bleak outlook for its semiconductor and display market considering stagnant sales growth in major markets, including China and the United States.

Samsung Electronics posted a near 8 percent drop in second-quarter net profit as its smartphone business remained tepid on lackluster Galaxy S6 sales and harsh competition from Chinese rivals.

Its new high-end smartphones with wider screens released last month failed to offset a negative outlook on its mobile business.

Samsung took up 21.7 percent of the world's market for smartphones in the April-June period, down from the 24.8 percent posted a year earlier, data compiled by industry tracker IDC showed. Other data also implied that its market share stood flat on-year over the cited period.

In contrast, Chinese tech firm Huawei last month announced that its global smartphone sales jumped 39 percent in the first half of this year, helping the firm to become the world's fourth-largest handset maker. (Yonhap)