Galaxy S7 Sales Drive Samsung Profits Higher?

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Source:   —  April 07, 2016, at 9:14 AM

Samsung's share price falls despite a stronger than expected profit forecast as investors see beyond the first quarter of two thousand sixteen.

Galaxy S7 Sales Drive Samsung Profits Higher?

Samsung has flagged a ten percent rise in first quarter profits, following the decision to release its new Galaxy S7 smartphone range early last month.

The S Korean electronics firm'south phone div has struggled in recent times amid pressure from competitors and phones seen as lacking innovation - losing market share to the likes of Apple at the top finish and cheaper rivals, Huawei and Xiaomi.

But while the release of Samsung's estimates for Jan to March contained number breakdown of sales for any div including its semi-conductor or TV units, analysts suggested that its decision to bring forward the roll-out of the S7 and S7 Edge was the likely driving force behind the firm'south improved forecast.

Ahead of the release of its audited results later this month, the world'south largest smartphone producer said operating profit was expected to reach around $5.6bon (£3.9bn) - a rise of ten percent on the same period latest year and beating most analysts' estimates.

The result, on the face of it, would be encouraging for shareholders after a year that saw $8bn wiped from Samsung'south market cost amid worries over its smartphone business and the slowdown in the world economy.

However, early gains in its share price on Wednesday were soon erased, with traders citing fears that Samsung'south move to release the S7 early had merely brought sales forward.

Greg Noh, an analyst at HMC Investment Securities, voiced doubts that the first quarter profit rise would be extended to the rest of the year.

"It'll be challenging to carry on the momentum. From the following quarter, there will be a rise in marketing costs for consumer sales.

"Samsung will probably not look a higher rise in profit than it did this quarter for the rest of the year," he added.

The company'south chip business, which has propped up Samsung'south overall performance amid the pressure on the smartphone unit, provides parts for the company'south own handsets as well as those of rivals.

They comprise Apple - which the new iPhone SE and a smaller model of the iPad Pro.

Huawei launches its first foray into the high-end smartphone market following week with the P9.

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