"Smartphones sales to boost Samsung Q2 results"

The Samsung Galaxy S III. Reuters.

Seoul, South Korea: Samsung Electronics Co, the world’s top maker of mobile phones, memory chips, flat-screen panels and televisions, will release guidance for its second-quarter results Friday, giving insight into its performance before the disclosure of full results at the end of this month.

WHAT TO WATCH FOR: Even though Samsung is expected to report a record-high operating profit for another quarter on the back of strong demand for Galaxy smartphones, its share price has lost steam since closing at a record high on May 2.

Investors have reined in their optimism after the Galaxy S III smartphone experienced a delay in shipments due to component shortages since its May 29 launch. More than 60 percent of Samsung’s second-quarter operating profit, which may be nearly 7 trillion won ($6.15 billion), is expected to come from its mobile communications division.

Analysts, including Lee Sun-tae at NH Investment & Securities, lowered estimates of Samsung’s flagship smartphone sales in the second quarter from 7 million to 6 million phones, after some mobile carriers delayed offering it. Analysts’ estimates of Samsung’s total smartphone sales in the period range between 48 million and 52 million phones.

On Friday, Samsung will give an estimate of consolidated revenue and operating profit without giving net profit or a breakdown for each business division. For the second quarter, investors are expecting to get updates on S III phone sales. They will be also looking for clues about Samsung’s smartphone strategies for the rest of the year as Apple Inc. will probably unveil a new iPhone in the third quarter, heating up competition with the Android-based Galaxy devices.

WHY IT MATTERS: With annual revenue of 165 trillion won ($145 billion) in 2011, Samsung Electronics is the world’s largest technology company by revenue. Its results will be an indicator of demand for consumer electronics from personal computers to televisions in China, Europe and North America and other key markets at a time when the global economy feels the heat of Europe’s debt crisis.

Samsung is one of the few handset makers that has expanded its market share and has seen a big jump in mobile profit in the last two years as the South Korean firm lures customers from Research In Motion and Nokia Corp. The company ended Nokia’s decade-long dominance in the mobile phone market in 2011. Samsung is forecast to sell 220 million smartphones this year, more than double the amount it shipped in 2011, according to Song Jong-ho, an analyst at Daewoo Securities.

WHAT’S EXPECTED: Analysts polled by Yonhap Infomax, a financial information unit of Yonhap News Agency, expect an operating profit of 6.72 trillion won ($5.91 billion) and revenue of 50.13 trillion won ($44.06 billion) for the April-June period.

LAST YEAR’S QUARTER: Samsung Electronics reported 3.75 trillion won in operating profit on revenue of 39.44 trillion won. Its net profit was 3.51 trillion won.