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Samsung and HTC: Gaze upon our EMBIGGENED numbers, pesky analysts

Mobe makers trounce profit estimates but remain shadow of former selves

Cost-cutting and better-than-expected mobile shipments helped Samsung Electronics and HTC trash analysts' profit forecasts, according to both firms' unaudited Q1 data.

Results from the Korean chaebol took a turn for the worse in 2014 as demand for its smartphones and tabs crashed, causing an inventory pile-up that proved costly to rectify.

Yet investor guidance for calendar Q1 shows Sammy made an operating profit of 5.9tn Korean won (£3.64bn). Analysts previously expected a haul in the region of 5.3 to 5.5tn Korean won.

This is still well down on the 8.5tn won (£5.25bn) operating profit Samsung made in the same period a year ago before the stock crisis showed up but is up sequentially on the 4.1tn Korean won (£2.53bn) in Q4.

In addition to cost cutting, part of the margin improvement for Samsung comes from the use of its own Exynos processor in the Galaxy S6 rather than the Qualcomm Snapdragon 810, which would have been the logical progression from the Galaxy S5.

The mobile business had become the biggest profit generator at Samsung but were hit badly last year as sales declined for the first time since 2006, down a whopping 21 per cent year-on-year. The baton was again passed to the semiconductor division.

It was also a relatively better start to the year for embattled smartmobe maker HTC, another business that tech analysts reckoned was, like Samsung, also suffering at the hands of Apple and Xiaomi.

The Taiwanese biz said preliminary results for Q1 show it made a profit of NT$360m (£7.8m) compared with analysts’ estimates of NT$155.5 (£3.37m) - this is a bounce back from the loss of NT$1.88bn (£4bn) a year earlier.

HTC's revival is based on slashing overheads and sales of the mid-range Desire phones in emerging markets.

In the short term the company can look to reap the benefits of the new HTC One M9, but in the long term both Sammy and HTC will continue to feel the squeeze between Apple at the top and a mass of incoming Chinese vendors at the bottom. ®

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