Galaxy S7 to drive up Samsung profits
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Company legal chief says Apple disputes to continue
By Kim Yoo-chul
Samsung Electronics is expected to report boosted profits from the first quarter of this year propelled by brisk sales of its flagship Galaxy S7 (S7) smartphones.
"We can confirm that S7 sales are looking very good," Lee Sang-hoon, chief of Samsung Electronics' management support group, told reporters after his participation in Wednesday's weekly meeting of presidents of Samsung affiliates at Seocho Samsung Tower, southern Seoul.
Market analysts expect the world's top smartphone manufacturer to report a first quarter operating profit over 6 trillion won ($5.2 billion), beating earlier expectations.
Given Samsung's unique supply chain system, brisk sales of its flagship smartphone are also helping other divisions and group affiliates strengthen their bottom line. Samsung Electronics is heavily sourcing key components from its chip divisions, Samsung SDI and Samsung Electro-Mechanics.
"We revised up our target on Samsung Electronics stock from 1.55 million won per share to 1.65 million," said Lee Se-chul, an analyst at NH Securities. "Our estimate for Samsung's combined profit throughout this year is 24 trillion won up from 21.9 trillion won in 2015."
Daishin Securities analyst Kim Kyung-min said operating profit for Samsung Electronics during the January to March period will reach between 6 trillion won and 6.4 trillion won.
The two variants of the S7 _ one rigid and the other curved _ have been commercially available since early this month. So far, more than 10 million S7s have been sold in terms of shipments to Samsung's carrier partners.
In preorders, the S7 has exceeded earlier expectations in its key markets of China, Europe and India. In Europe, Samsung suggested a 250 percent increase in combined preorder sales since the S7 launch over the S6.
Samsung officials say the early success is largely due to its decision to include more features such as the reintroduction of the microSD card slot and increased water resistance, along with a 10 percent price cut in some markets.
Samsung Electronics spokesman Lee Won-ho declined to comment on the company's estimated profit for the first quarter. The company will announce its preliminary first quarter earnings guidance next week.
With stronger sales of the S7, analysts say the weakening won was also attributable for improved quarterly profit.
"Samsung may have benefited from a weakening won against major currencies during the January-March period," said an official.
Apple dispute will continue
In a separate meeting with local reporters, the company's legal chief said its ongoing patent disputes with Apple will continue.
"Apple filed a retrial in courts in the United States," said Kim Sang-hyun, president of Samsung's legal office.
The remarks came after a U.S. appeals court overturned a lower court's decision and ordered Apple to pay Samsung for its infringement of some Samsung patents.
In May 2014, juries in a court in San Jose, California, ruled that Samsung infringed on three Apple patents.
The appeals court nullified two out of the three patents, for which the lower court ordered Samsung to compensate Apple, while the appeals court ruled Samsung didn't infringe on the remaining Apple patent, asking Apple to pay $158,000 to Samsung.
Kim didn't elaborate further. Samsung agreed with Apple to drop all lawsuits outside the U.S.
The company's television chief Kim Hyun-seok said Samsung headquarters in Korea is reviewing why football icon Pele sued the company in the U.S.
"We are closely looking at the case," Kim told reporters.
Pele sued Samsung in a federal court in Chicago, claiming that the consumer electronics giant used a lookalike in a full-page advert for its HDTV that appeared in the New York Times. Pele is seeking $30 million in compensation from Samsung.
