Samsung Electronics expects that the profits for the first quarter rose 10 %, pointing to a good start of new smartphones Galaxy S7 sales, but investors are worried that the technology giant will not be possible to maintain a strong performance for a long time as there are new competitive offerings from its rivals.
The South Korean company said on Thursday that operating profit for the first quarter will exceed market forecasts, reinforcing hopes that its mobile phone division recorded an operating profit for the first time in three years.
The company said that its operating profit for January-March was probably 6.6 trillion won ($ 5.7 billion), well above the consensus forecast of analysts polled by Reuters – 5.6 trillion.
Samsung will release the final results at the end of April and declined to comment on the development of its units.
The brokerage companies have improved the company's profit forecasts to the end of March, after better than expected data on the sales of Galaxy S7 series of smart phones. The Samsung division of mobile devices will likely show the best result for the first time in seven quarters, analysts say.
Meanwhile, in connection with the release of the new iPhone SE by its rival – Apple (NASDAQ: AAPL) and the upcoming release of the flagship smart phone P9 from Huawei, the enthusiasm of investors in relation to indicators of the South Korean company remains cautious.
"Profit for the first quarter of this year will be at its peak," - said a HMC Investment analyst, Greg Rowe, noting that the cost of marketing campaigns for mobile phone units will increase in the next quarter, which will lead to lower profits.
Another analyst, Ben Thompson from Stratechery, said that “Sales will start to stabilize not because Samsung is doing anything new, but because all the bad things that happened to them have already happened”.