Samsung's High-End Smartphone Sales Increases Profits

The 14.3 percent of operating profit margin indicates the strong sales of the company's high-end smartphone line-ups and they are expected to take away the ones of the rival companies. Lee Sun Taeanalyst, NH Investment & Securities

Strong sales of Samsung's high-end smartphones led to a 79 percent jump in the company's operating profits for the second quarter of 2012.

The mobile phones, flat screen panels, memory chips and TV maker in Suwon, South Korea said Friday in its guidance for the quarter that the operating profit for the quarter was likely to be about 6.7 trillion won (US$5.8 billion at the exchange rate on the last day of the quarter), compared to 3.75 million won in the same quarter last year. 

Revenue was expected to be up by in the April-to June quarter by about 20 percent to 47 trillion won.

With its latest Galaxy S III expected to do well, the company is expected to retain its top position in the smartphone market in the quarter until it gets into a tight race with Apple's anticipated new iPhone in the later quarter, according to analysts.

"The 14.3 percent of operating profit margin indicates the strong sales of the company's high-end smartphone line-ups and they are expected to take away the ones of the rival companies," said Lee Sun Tae, an analyst with NH Investment & Securities.

Of the operating profits, about 4.1 trillion won came from smartphone sales, Lee said. Shipments of the Galaxy S III are expected to be about 20 million in the third quarter, he added.

The phone was launched this May worldwide. After some delays in shipments, some U.S. carriers have started offering the device. AT&T for example said in a blog post that the Galaxy S III will be available at AT&T stores from Friday. "Thousands of customers, who just couldn't wait, have already preordered it and have the device in hand," it added. Verizon Wireless has said the device will be available at its stores and online from July 10.

The company is expected to have shipped 95 million handsets in the quarter of which 45 million were smartphones, and 2 million were tablets, according to Scott Bicheno, a senior analyst with Strategy Analytics.

Despite the strong handset sales, Korea Investment and Securities lowered the forecast for the third-quarter operating profit to 7.6 trillion won from 8.5 trillion won considering the slowdown in the semiconductor market and shrinking demand for finished-set products. 

A court in California recently ordered preliminary injunctions against sales in the U.S. of Samsung's Galaxy Nexus smartphone, and Galaxy Tab 10.1 tablet. Samsung has stated its intention to appeal, and also said in court that it has other models to sell.

The full earnings is scheduled to be released on July 27.