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Samsung sees 10% profit growth on better-than-expected sales of flagship Galaxy S7

On the heels of the launch of the Galaxy S7 and S7 Edge, Samsung Electronics issued preliminary guidance on Thursday saying it expects profits to grow more than 10 percent for the first quarter of 2016, exceeding market expectations.

Galaxy S7

Samsung Galaxy S7


Samsung's new guidance calls for consolidated operating profit of 6.6 trillion Korean won, or $5.7 billion U.S. That would be a 10.4 percent increase from a year prior.

It's also above consensus estimates from investors, who expected profits of 5.53 trillion won, according to polls conducted by Bloomberg. It's estimated that the S7 lineup sold 9 million units in their first month, tripling that of the previous-generation Galaxy S6.

In contrast, Apple sold 13 million iPhone 6s and iPhone 6s Plus units in just one weekend when both devices launched last September.

The S7 lineup launched in March and was met with positive reviews, with critics praising Samsung's hardware and design. The handset's software— primarily Samsung's proprietary TouchWiz interface —were said to be the weak points for the devices.

Facing high-end competition from Apple and being attacked at the low-end by Chinese manufacturers, Samsung has faced two straight years of declines in its mobile business. The first-quarter turnaround comes after Samsung has made efforts to streamline its lineup and focus on its most competitive devices.

Samsung will face even tighter competition in the mid-range market, especially in emerging markets, thanks to the launch of Apple's new 4-inch iPhone SE. Priced starting at $399, it's the most affordable new iPhone model Apple has ever introduced.

On the high end, Samsung's Galaxy S7 and S7 Edge are expected to face competition from Apple's "iPhone 7" beginning this fall. If Apple sticks to its usual release schedule and strategy, the next iPhone should feature an all-new design and A10 processor, and launch starting at $649 without contract this September.