Samsung posts disappointing earnings forecast for Q2

SEOUL (AFP) - Samsung Electronics Co., the world's largest technology firm by revenue, on Friday fuelled concerns about flagging demand for high-end smartphones with a weaker-than-expected earnings forecast for the second quarter.

The South Korean giant forecast of 9.5 trillion won ($10.5 billion) in operating profit for the April-June quarter would be a record. But analysts had expected a figure of more than 10 trillion won, and shares in the firm lost more than three percent in afternoon trade.

"It's weaker than expected. Slow mobile sales, combined with hefty marketing costs for the flagship Galaxy S4 smartphones, undermined the bottom line," Jeff Kim, of Hyundai Securities, told AFP.

He said earnings would be improved in the next quarter as marketing costs were expected to go down and semiconductors and displays would perform better.

"I expect the operating profit to hit 10.5 trillion won in the third quarter," he said.

But Daiwa Securities analyst Jae H. Lee said the firm would likely be hit further by higher advertising costs in the second half as it tries to keep sales volumes up.

Samsung has lost nearly US$30 billion in market value since mid-March, before it launched the Galaxy S4 smartphone a month later.

Investors are concerned that the company relies too heavily on IT and mobile business, which accounts for more than 70 percent of its operating profit, at a time when the global outlook for this sector is not so bright, Jeff Kim said.

Several brokerages have downgraded Samsung and their earnings forecasts for the company on fears that the S4 is not selling as strongly as hoped.

Samsung, the world's top maker of smartphones, memory chips and flat-panel TVs, was giving earnings guidance before official results at the end of July.

The new market jitters about Samsung come after Canada's troubled BlackBerry, fresh after launching two flagship phones, on Friday posted an unexpected first-quarter loss and disappointing sales figures. Its share price tumbled nearly 28 percent on the news.

Shares in US computer giant Apple are well off their historic highs, having taken a beating earlier this year on concerns that demand for the iPhone 5 may be tapering off.