2012 could be year of Samsung smartphones

SEOUL, SOUTH KOREA: Samsung Electronics, the world's top maker of memory chips and smartphones, is set to report a robust quarterly profit rise on Friday, starting 2012 on an upbeat note aided by record-smashing sales of smartphones.

The South Korean firm, which surged past Apple as the world's top smartphone maker in the third quarter, is quickly building on its supremacy with sleek designs and a rich product line-up, while the latest models from the likes of HTC, Nokia and BlackBerry maker Research in Motion struggle to interest consumers.

The handset division is now Samsung's biggest earnings generator, raking in record profits.

Samsung is also weathering a profit squeeze stemming from its bread-and-butter memory chips with new revenue sources such as mobile processing chips and high-end OLED displays, as key rivals increasingly bank on Samsung for components to power their tablets and smartphones.

"Samsung's got great business portfolios from components to a wide range of consumer electronics that enable it to better tide over the volatile technology cycle than many of its peers," Lim Do-ri, an analyst at Solomon Investment & Securities.

"Its smartphone business is now a main growth driver, and has also lifted growth of its component business. But the biggest challenge is whether it can hold onto its smartphone market share against rivals. Any retreat in phones could also be detrimental to mobile chips and display operations."

Samsung, Asia's most valuable technology firm with a market value of around $150 billion, is due to report October-December guidance on Friday before it announces detailed quarterly results in late January.

The world's biggest technology firm by revenue is likely to report 4.7 trillion won ($4.1 billion) in October-December operating profit on revenue of 46.2 trillion won, according to a consensus of 30 analysts surveyed by Thomson Reuters.

That would be its best profit since the third quarter of 2010, and up 57 per cent from a year ago and 11 per cent from the preceding quarter.

In 2012, Samsung is likely to report a 28 percent rise in operating profit with a 12 per cent gain in revenue, according to analysts.

In 2012, its smartphone sales are expected to rise to as high as 170 million units, according to BNP Paribas and Korea Investment & Securities, the most bullish street view, from an estimated 95 million units last year, powered by a diverse product portfolio that spans high-end Galaxy models to cheap phones using Samsung's own 'bada' software.

Its latest Galaxy Note model, which runs on fast 4th-generation (4G) networks, is touted by some followers as a 'phablet' as its 5.3-inch display and powerful dual core processor makes it work as both a tablet computer and smartphone. Its successful debut in some European and Asian markets during the year-end holiday season has raised hopes for a solid U.S. launch in coming months.

One-off gains expected in the fourth quarter include around 500 billion won from the sale of its hard disk drive business to Seagate Technology, and reduced mobile provisions involving royalty payments, analysts estimate.

Reflecting the upbeat outlook, shares in Samsung, Asia's most valuable technology stock, scaled record high to 1.11 million won this week. It is the best performing stock among major global peers, rising 29 per cent over the past six months. Apple has gained 21 percent, Sony Corp tumbled 35 per cent, Nokia fell 16 per cent and HTC lost 50 percent during the same period.