Samsung's Q2 forecast highlights tech industry strength

The company forecast record operating profit for the second quarter

Samsung Electronics, one of the world's largest electronics makers, on Wednesday forecast record operating profit for the second quarter of 2010 on strong sales.

The company is considered a technology industry bellwether because it is the world's largest producer of several products, including flat-screen TVs, DRAM, NAND flash memory chips and LCD screens, as well as the second-biggest mobile phone vendor. Its strong guidance for the second quarter, which ended June 30, suggest the technology industry continues to rebound after the global downturn last year.

Samsung said its operating profit will reach approximately 5 trillion Korean won (US$4 billion), while sales will hit 37 trillion won. The 5 trillion won figure would beat Samsung's previous record high of 4.4 trillion won in the first quarter. The company will likely report the final results by the end of this month.

The company's forecasts have proven accurate in the past. Samsung nearly matched the guidance it provided in the first quarter, when it reported final results in April. The company forecast first quarter operating profit would reach 4.3 trillion won and its final results put the figure at 4.4 trillion won. Samsung also forecast 34 trillion won in sales for the first quarter, and the final result was 34.6 trillion won.

The strong forecast is one of the latest signs the technology industry continues to grow, though some analysts fear growth could slow in the second half of this year due to worries over debt in Europe and a possible slowdown in China's growth. Those doubts prompted a 1.3 percent decline in Samsung's stock to 62,700 won on the Korea Exchange on Wednesday, while the Kospi Composite Index of South Korean stocks slipped 0.6 percent.

Samsung has been bullish this year on prospects in the tech industry.

In May, the company announced its biggest spending plan ever for a single year, 26 trillion won, including 11 trillion won for new chip production lines and 8 trillion won for research and development. The company also said it planned to hire 10,000 new workers this year.

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Dan Nystedt

IDG News Service
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