Samsung's Profit Jumps 50 Percent Despite Galaxy Fiasco
SEOUL, South Korea (AP) — 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 see big gains thanks to its mainstay semiconductor business, but the result surpassed even the most optimistic forecast. 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.
The result is a bright spot for the tech giant that reeled from multiple product recalls last year, including a popular smartphone and a washing machine.
The stellar financial results come as Samsung faces an investigation linking it to South Korea's biggest influence-peddling scandal that led to the impeachment of President Park Geun-hye. Samsung has already postponed its annual personnel reshuffle, usually announced in December, due to the scandal that has rocked South Korea.
Samsung Group faces allegations that Samsung Electronics and its affiliated companies paid money to foundations and a company controlled by Park's long-time friend 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.
The head of the national pension fund who allegedly pushed the fund to support the merger was arrested last month by prosecutors investigating the scandal. Samsung executives including the ailing chairman's son Lee Jae-yong will soon be summoned by investigators, according to local media. Lee had earlier denied the company had sought any favors, but admitted that it was "inappropriate" but "inevitable" to send money to Choi's company in Germany.
The public is still in the dark about why Galaxy Note 7 smartphones overheated and caught fire last year, which prompted two recalls and eventual discontinuation of the flagship product.
Tim Baxter, chief operating officer 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 fire "very soon." Samsung has been investigating the phone for more than three months.
– by AP Reporter Youkyung Lee