Samsung's $13 Billion Day Bolsters Faith in Revival Strategy

Shares Surged As Revamped Smartphone Lineup Gains Traction

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Samsung's Galaxy S6 Edge Plus smartphones.
Samsung's Galaxy S6 Edge Plus smartphones. Credit: Matthew Lloyd/Bloomberg

Investors have punished Samsung Electronics this year for its struggles against Apple and Chinese makers. They just gave it a $13 billion vote of confidence.

Shares surged the most in more than six years as a revamped smartphone lineup and a renewed focus on components gains traction. Earnings jumped 80% in the September quarter, beating estimates and snapping a streak of seven consecutive declines.

After climbing to the top of the global smartphone market, Samsung came under siege from iPhones at the premium end of the market and inexpensive devices from Xiaomi that won over budget consumers. While the South Korean company responded by investing billions of dollars in semiconductor and display factories to supply its rivals, analysts cut earnings estimates and helped drive the stock toward a third straight annual slide.

"Today's surprise results show those blue days are finally over and lend support to the market that it's about time to give Samsung another look," said Peter Yu, an analyst at BNP Paribas SA in Seoul. "Analysts will now have to revise up their estimates, and it's been a while since they've done that."

After Wednesday's rally, Samsung shares closed at 1,251,000 won in Seoul, increasing its market value by 14.7 trillion won ($13 billion). That cut the company's loss in market capitalization this year by more than half.

Revenue rose about 7.5% to 51 trillion won in the quarter, the Suwon-based company said. Samsung didn't provide net income or details of division earnings, with audited results scheduled for later this month.

Price Cuts
Analysts expect profit in mobile devices rose 24% to 2.2 trillion won, the first year-on-year increase in seven quarters.

Samsung released the Galaxy S6 Edge Plus and Note 5 in August, beating new iPhones to the market by about a month. They debuted after lackluster sales of the premium Galaxy S6 prompted price cuts and a $120 rebate to customers buying on installments or a leasing plan.

Samsung shipped about 81 million phones in the third quarter, according to the analyst survey. The company shipped 72 million units in the previous quarter.

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