Samsung expects growth in the third quarter, beating estimates despite Note 7 fiasco

Tech giant Samsung Electronics Co said it expects third-quarter operating profit grew 5.6 percent, beating estimates, as a pickup in chip and display earnings likely offset the impact of the Galaxy Note 7 smartphone recall. In a brief regulatory filing, the world’s biggest smartphone maker said on Friday July-September profit was likely 7.8 trillion won ($7 billion), compared with the 7.4 trillion won tipped by a Thomson Reuters StarMine SmartEstimate of analysts’ forecasts. A year earlier operating profit was 7.4 trillion won. Revenue for the quarter likely fell 5.2 percent to 49 trillion won, the South Korean firm said. Samsung disclosed only overall estimates in its filing and isn’t scheduled to issue full results with details of how its business lines performed until late October. The firm made no comment in the filing on how much the Galaxy Note 7 recall might cost. The filing also made no reference to how the company plans to respond to proposals submitted earlier this week by activist investor Elliott Management for a radical corporate makeover that would split the firm into a holding vehicle for ownership purposes and an operating company. The company said on Thursday it was “carefully reviewing” the proposals. Analysts had lowered expectations Samsung’s third-quarter earnings after it announced a global recall of at least 2.5 million Note 7s in 10 markets, including the United States and South Korea, due to faulty batteries causing some phones to catch fire. Some brokerages said the recall would cut Samsung’s mobile profits by 1 trillion won or more. A pickup for Samsung’s components businesses likely helped cushion the blow, investors said ahead of the earnings guidance. Prices for memory chips are rising due to increased demand from smartphone makers such as Apple Inc, likely leading to the semiconductor division’s best-operating profit in four quarters, some analysts said. Reuters