Samsung Earnings Buoyed by Chip Demand From Cloud Services
06 Jul 2020
Samsung Electronics Co. reported better-than-expected profits after surging internet traffic propelled chip demand and gadget sales started recovering from the Covid-19 slump.
The world’s largest manufacturer of memory chips and smartphones posted operating profit of 8.1 trillion won ($6.8 billion) in the three months ended June, beating the 6.2 trillion won average of estimates. Sales for the quarter were 52 trillion won, according to preliminary results released Tuesday. The company didn’t provide net income or break out divisional performance, which it will do later this month when it releases final results.
The estimates include a one-time gain related to the display business. While the company didn’t offer details, some analysts estimated it could have recorded a gain of as much as 1 trillion won in compensation from Apple Inc. for fewer-than-promised display orders.
The South Korean company’s strong performance suggests the tech industry is climbing back from the Covid-19 pandemic, which has hammered the global economy but also accelerated a shift toward online activity such as video conferencing, web-based education and entertainment streaming.
Although Samsung had warned of a profit slide in the second quarter due to plant and store closings, it managed to mitigate the fallout by cutting marketing expenses and selling TVs and monitors to people spending more time working and playing at home.
“Earnings remained brisk despite the weakness of offline-dependent smartphone sales,” Greg Roh, senior vice president at HMC Securities, said ahead of the announcement. “Going forward, the market will have more confidence in Samsung’s ability to stave off the next macro crisis.”
Source: Bloomberg
