Shares of Samsung Electronics surged to a two-year high after the Korean tech giant posted third-quarter earnings guidance that beat analysts’ estimates. 


The company estimated its third-quarter profit rose almost 80 percent on-year to 7.3 trillion won ($6.3 billion) from 4.06 trillion won, its first quarterly profit gain in two years and the biggest since the first quarter of 2014.

The figure compares with the 6.7 trillion won average of analyst estimates here.

Sales were also expected to have risen 7.5 percent from a year ago to 51 trillion. The company will report its full results, including details of division earnings, later this month.

Buoyed by the earnings surprise, shares soared 8.69 percent to close at 1.251 million won on the Seoul bourse.

“Semiconductors and displays drove up overall sales. The favorable won-dollar exchange rates also positively affected its earnings,” said Park Gang-ho, an analyst at Daishin Securities.

Analysts estimated earnings from semiconductors at about 3.5 trillion won, a more than 50 percent increase from a year ago.

The chip business division, which supplies in-house and also to rivals, including Apple, said last month it wanted to expand the logic, or processing, chips business to add to its leading position in memory chips.

Samsung sets prices for most components in U.S. dollars, gaining when the sales are translated back into Korean won, which has dropped against the greenback.

“Share prices have been underestimated based on the company’s lukewarm device sales. But the latest earnings have proved component sales are strong enough to elevate its market valuation,” Park said.

After several new phone launches, Samsung is believed to have shipped more than 8 million mobile devices in the quarter but the record number is unlikely to improve profits.

The company spent heavily on marketing costs for a series of premium phones, while expanding sales of less profitable low-end phones in emerging markets.

Analysts predicted Samsung would continue to struggle in the competition with Apple’s iPhones and budget devices from Chinese rivals.

“Its defensive strategy against the iPhone 6S that was launched last month will decide the company’s fourth quarter earnings,” said an industry source.

Ahead of the iPhone S6 arrival on its home turf, Samsung on Wednesday announced price cuts on its flagship Galaxy S6 and S6 Edge phones.

Under the new pricing scheme, a 32 gigabyte Galaxy S6 is now available for 779,900 won from 858,000 won, while the price of a 64 gigabyte model is lowered at 799,700 won from 923,000 won.

By Lee Ji-yoon (jylee@heraldcorp.com)