Samsung expects profit of up to USD9.2 billion in third quarter, gets investor pressure

By Rizza Sta. Ana

Oct 04, 2013 11:02 AM EDT

Samsung Electronics Co released its guidance for record operating profit for the three months ending September 30. The guidance revealed that the South Korean electronics and mobile company expected operating profit in the range of KRW 9.9 trillion to KRW 10.3 trillion, or USD9.2 billion to USD.6 billion. The company had posted KRW9.5 trillion in the second quarter. The estimates indicated a slowdown from the second quarter at 47.5%, but overall was a rise in annual growth of up to 27.8%. 

Although financial results of Samsung's four main divisions would be released at the end of October, analysts doubt the sustainability of the company's most profitable unit. HMC Investment & Securities Greg Roh wrote in a research note, "Despite record-high earnings, doubts over the sustainability of smartphone-driven profits hint at an overall valuation discount for Samsung."

Sanford C. Bernstein analyst Mark Newman told in a report to clients last week that the weakness of Samsung's stock attributed to the inadequacy of cash return. The company's cash hoard had risen to around USD50 billion. He added in an interview, "Growth is slowing and cash is accumulating. This is getting more and more important for investors." 

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