Samsung €11bn day bolsters faith in revival
Investors have punished Samsung this year for its struggles against Apple and Chinese makers. But this week they gave it an €11bn vote of confidence.
Shares surged the most in more than six years as a revamped smartphone lineup and a renewed focus on components gained traction. Earnings jumped 80pc in the September quarter, beating estimates and snapping a streak of seven consecutive declines.
After climbing to the top of the global smartphone market, Samsung came under siege from iPhones at the premium end of the market and inexpensive devices from Xiaomi that won over budget consumers.
While the South Korean company responded by investing billions of dollars in semiconductor and display factories to supply its rivals, analysts cut earnings estimates and helped drive the stock toward a third straight annual slide.
"Today's surprise results show those blue days are finally over and lend support to the market that it's about time to give Samsung another look," Peter Yu, an analyst at BNP Paribas SA in Seoul, said yesterday. "Analysts will now have to revise up their estimates, and it's been a while since they've done that."
After yesterday's rally, Samsung shares closed significantly up, increasing its market value by €11bn. That cut the company's loss in market capitalisation this year by more than half.
Revenue rose about 7.5pc to €39.2bn in the quarter, the company said. Samsung didn't provide net income or details of division earnings, with audited results scheduled for later this month.
The decline in the South Korean currency has helped Samsung, which sets prices for most components in US dollars and gains a benefit when those sales are translated back into Korean won. The US dollar was about 11pc higher against the won at the end of the quarter compared with a year earlier.
Samsung released the Galaxy S6 Edge Plus and Note 5 in August. They debuted after lacklustre sales of the premium Galaxy S6 prompted price cuts. Samsung shipped about 81m phones in the third quarter, according to the analyst survey. The company shipped 72m units in the previous quarter.