Samsung announced strong third-quarter earnings guidance to investors on Friday despite its exploding smartphone woes, thanks in part to the company’s component and display panel business.
The Korean technology firm said it expects to earn $7 billion in operating profit for the three months ended September 30 – a 5.5 percent improvement from a year earlier – in a quarter that includes Samsung’s recall of 2.5 million Galaxy Note 7 smartphones.
The company’s final earnings won’t be released until later in October, but the profit preview demonstrates Samsung’s ability to rely on other phone and PC makers to drive sales, and underlines the robustness of Samsung’s diversified business model during difficult times.
The company is now the undisputed market leader in DRAM memory chips and next-generation 3-D NAND flash memory chips. Samsung also has a substantial lead over its rivals in sales of OLED panels, which are increasingly being adopted for use in smartphones. Currently, Apple’s only supplier signed on to create OLED displays for the iPhone 8 is Samsung.
The exploding Note 7 debacle has dominated headlines recently, with a U.S. passenger plane being evacuated just this week when one of the phones began emitting smoke. Shares dipped 13 percent following initial reports of the widespread problem, which analysts estimate cost the company between $1 and $5 billion, not discounting significant damage to its smartphone brand. And yet shareholders’ confidence in Samsung’s semiconductor and display manufacturing have seen shares rebound into record territory.
Expectations for corporate governance changes have also fueled some of the recent gains, according to The Wall Street Journal. A day before Samsung’s Q3 earnings preview, shares jumped 4.5 percent to a new record high after U.S. activist investor Elliott Management Corp. argued that Samsung was undervalued by as much as 70 percent.
After the release of its earnings preview, Samsung’s stock increased by an extra 0.9 percent to finish above the 1,700,000-won mark for the first time in its history.