Published : Aug. 4, 2016 - 11:04
The Galaxy Note 7, Samsung Electronics Co.'s latest high-end smartphone, is likely to sell better than its predecessors, which may help the world's largest maker of smartphones log decent earnings in the current quarter, industry sources said Thursday.
Samsung unveiled the phablet, the successor to the Note 5, in New York on Tuesday in a bid to keep up the momentum of its smartphone sales. The launch of the Galaxy Note 7 came ahead of the latest iPhone launch, expected in the autumn, and days after Samsung reported its biggest quarterly profit in more than two years thanks to strong sales of Galaxy S7 smartphone series.
The new Galaxy Note features an iris scanner and an S-Pen that allows users to translate words. Adding an extra security feature, the iris scanner enables only the owner of the device to use the smartphone.
"(The Note 7) has the innovation of the Galaxy S7 series, and is equipped with an S-Pen and software, and its sales may be greater than the Galaxy Note 5," said Koh Dong-jin, head of Samsung's mobile division, said Tuesday after the Unpacked event at the Hammerstein Ballroom in New York.
Since last year, Samsung has been unveiling its high-end Galaxy smartphone series earlier than scheduled to stay ahead of Apple Inc., which eventually boosted its market presence and earnings.
Aided by stronger-than-expected shipments of the Galaxy S7 smartphones, Samsung logged an operating income of 8.14 trillion won (S$7.31 billion) during the second quarter of the year, with its mobile business division racking up an operating income of 4.32 trillion won, up 57 percent from a year earlier.
The sources said Samsung's mobile division may log a stronger-than-expected bottom line under the current quarter on the back of the Galaxy Note 7's earlier than expected release.
"Samsung's Galaxy Note 7, equipped with high-end features, may boost Samsung's earnings," a source said.
Samsung earlier said its smartphone margins may be under pressure in the third quarter as Apple Inc. will roll out its latest iPhone in the autumn.
However, Samsung said a gain in its component earnings would offset rising marketing costs.
Soh Hyun-cheol, a researcher at Shinhan Investment, raised his forecast for Samsung's third-quarter operating profit to 8.35 trillion won, up 2.6 percent from the previous quarter.
"Although marketing costs are expected to rise, earnings are likely to improve because of improved performances in semiconductors and displays," Soh said.
Kim Dong-won, an analyst at Hyundai Securities, predicted Samsung will post an operating profit of 8.5 trillion won in the coming quarter.
Samsung said earlier it plans to maintain the prices of its Galaxy 7 smartphone series even after the release of the Galaxy Note 7, in a bid to maintain its operating margins.
The sources said Samsung's other businesses, such as home appliances and displays, may contribute to the tech giant's earnings.
But Samsung's earnings may be swayed by currency rates and rising competition from Chinese rivals, the sources said.
In a related note, Samsung's Koh acknowledged that it is struggling in the Chinese smartphone market but stressed that its market presence will rise there down the road. (Yonhap)