Samsung's profit jumps 50 percent despite Galaxy fiasco

January 6, 2017 by Youkyung Lee
A man walks by an advertisement of the Samsung Electronics Galaxy S7 Edge and S7 smartphones in Seoul, South Korea, Friday, Jan. 6, 2017. Samsung Electronics Co. said Friday that its profits in the last quarter of 2016 surged 50 percent to the highest level in more than three years, despite the Galaxy Note 7 fiasco. (AP Photo/Lee Jin-man)

Samsung Electronics Co. said Friday that its profits in the last quarter of 2016 surged 50 percent to the highest level in more than three years, despite the Galaxy Note 7 fiasco.

Analysts had expected Samsung's profits to surge thanks to its mainstay semiconductor business, but the result surpassed even the most optimistic forecasts. The semiconductor division cashed in on strong demand and a tight supply for microchips during the September-December period, likely contributing to more than half of its quarterly earnings.

In its earnings preview, Samsung said it posted 9.2 trillion won ($7.8 billion) in operating profit, up from 6.1 trillion won a year earlier. It was the biggest quarterly income since the third quarter of 2013.

Analysts polled by FactSet expected a figure of 8 trillion won.

Sales fell 1 percent to 53 trillion won ($44.9 billion). The company did not give net profit or breakdown figures for its businesses, which are due later this month.

For the full year, the South Korean tech giant saw a 10 percent gain in its annual income, its best result in three years.

"It's thanks to the improvement in semiconductors and displays on top of favorable foreign exchange rates," said Kim Young Woo, an analyst at SK Securities.

A man walks by an advertisement of the Samsung Electronics Galaxy smartphone in Seoul, South Korea, Friday, Jan. 6, 2017. Samsung Electronics Co. said Friday that its profits in the last quarter of 2016 surged 50 percent to the highest level in more than three years, despite the Galaxy Note 7 fiasco. (AP Photo/Lee Jin-man)

The result is a bright spot for the tech giant that was obliged to do multiple recalls last year of products that included a popular smartphone and a washing machine.

The stellar financial results come as Samsung faces an investigation linking it to an influence-peddling scandal that led to the impeachment of President Park Geun-hye. Samsung already has postponed its annual personnel reshuffle, usually announced in December, due to the scandal.

Samsung Group faces allegations that Samsung Electronics and its affiliated companies paid money to foundations and a company controlled by a long-time friend of Park's, Choi Soon-sil, in order to get the government's backing in a controversial merger of two Samsung affiliates related to Samsung's father-to-son leadership succession.

It is still unclear why the Galaxy Note 7 smartphones were prone to overheating and catching fire. That prompted two recalls and eventual discontinuation of the flagship product.

Tim Baxter, at Samsung's U.S. business, told reporters at the Consumer Electronics Show in Las Vegas on Wednesday that Samsung will share the root cause of the Galaxy Note 7 fires "very soon." Samsung has been investigating the issue for more than four months.

Explore further: Samsung Note 7 recall to cost at least $5.3 billion

Related Stories

Samsung Note 7 recall to cost at least $5.3 billion

October 14, 2016

Samsung Electronics said Friday that the discontinuation of the Galaxy Note 7 would cost the company about $3 billion during the current and next quarters, bringing the total cost of the recall to at least $5.3 billion.

Samsung to boost dividends, review corporate structure

November 29, 2016

Samsung Electronics said Tuesday it will increase shareholder returns and review its corporate structure as investors step up pressure to reform the South Korean tech giant's governance structure following the Galaxy Note ...

Taiwan's TSMC sees profit boost from iPhone 7

October 13, 2016

Apple's new iPhone 7 series gave Taiwan microchip giant Taiwan Semiconductor Manufacturing Co (TSMC) a boost Thursday as the firm announced profits were up by almost a third compared with last year.

Samsung warns of tough 2016 after 4Q profit sinks

January 28, 2016

Samsung Electronics reported Thursday a bigger-than-expected decline in fourth quarter earnings as its mainstay smartphone and semiconductor businesses suffered from weakening global demand for consumer electronics.

Recommended for you

Wireless power could enable ingestible electronics

April 27, 2017

Researchers at MIT, Brigham and Women's Hospital, and the Charles Stark Draper Laboratory have devised a way to wirelessly power small electronic devices that can linger in the digestive tract indefinitely after being swallowed. ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.