Samsung Electronics Co.’s share price up, posts a decreasing operating profit due to lower prices of Galaxy devices

Samsung Electronics Co., currently the largest smartphone manufacturer worldwide, made an official statement revealing a drop in its quarterly operating profit estimated to 8.4 trillion won (8 billion dollars), down from 8.8 trillion won during the same period a year earlier.

This is a second decline in a row when it comes to a quarterly profit, which came as a result of weakening demand that cuts the prices of the Galaxy devices and their components. Still, the results are just a bit ahead of the analysts forecasts, which amounted to 8.3 billion won. Samsung Electronics Co. posted 53-trillion-won sales for the period.

One of the analysts, who work for Shinhan Investment Corp. – Soh Huyn said in an interview, cited by Bloomberg: “The first-quarter is typically a weak selling season for all technology companies. High-end smartphone sales may have slightly missed the market consensus because it’s no longer a secret that the growth in the premium space is slowing.”

This announcement comes only a few days before the official launch of the new flagship smartphone of Samsung Electronics Co. – the Galaxy S5. The mobile unit of the company normally generates about two-thirds of the total earnings of Samsung and has achieved relatively good results during the first quarter of the financial 2014. still, the company faces hard time due to decreasing growth and falling margins.

According to analysts, the global launch of companys new smartphone Galasy S5, due on Friday, will be beneficial to the overall results of Samsung. As reported by the Financial Times, Hong Sung-ho, who is one of the analysts working for LIG Securities, commented: “We expect some positive effects from the new smartphone to appear from the second quarter. Although there are growing concerns over falling smartphone prices we expect the decline in profitability to be limited due to the increasing quantity of handsets sold.”

According to Financial Times, shares of Samsung Electronics Co. Ltd rose 1.23% to 1,397,000 Korean won in Seoul, while companys one-year return rate was -8.09%. The 40 analysts offering 12-month price targets for Samsung Electronics Co. Ltd have a median target of 1,725,000, with a high estimate of 2,000,000 and a low estimate of 1,150,000. The median estimate represents a 23.48% increase from the last price of 1,397,000.