Samsung Securities said on September 22 that Samsung Electronics' third-quarter operating profit would fall short of 4.7 trillion won and downgraded per share target price to 1.65 million won from 1.80 million won. Its outlook was based on the assumption that the company's smartphone business would perform more poorly than expected while its system LSI chip unit will see its loss widen further.

 

This is the first time for a securities firm to put out  a 3rd quarter earnings outlook for  Samsung below the 5-trillion-wonl. Originally the consensus level had been in the mid-6 trillion won level, which recently moved down to the 5-trillion-won level.

 

Hwang Min-sung, Samsung Securities analyst, said, "The main reason for the second-quarter smartphone performance shortfall was excessive inventories with distribution channels. But the third-quarter performance trouble may have to do with the fact that Samsung smartphones can no longer appeal to consumers. Although Samsung is working hard to remedy the situation, there is no movement among Samsung smartphone parts suppliers to expand production."

 

He also said, "Samsung's system LSI semiconductor unit will report the third-quarter loss of about 400 billion won due to a fall in prices and rising fixed costs. As for its consumer electronics unit that has posted small-but-steady stream of profit, it would report about 100 billion won in operating profit in the coming quarter from 770 billion won in the previous quarter."