Samsung Q3 2004 Handset Sales
From Samsung Earnings CC Slides:
tinyurl.com
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Handset Revenue
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Trillion KRW Billion USD |Trillion KRW Billion USD | QoQ
Q3 2004 Q3 2004 ¹ | Q2 2004 Q2 2004 ² | Growth
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4.57 T. KRW $3.965 B. USD | 4.61 T. KRW $4,004 B. USD | -1%
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Telecom Division Operating Margin ³
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.61 T. KRW $529 B. USD | .80 T. KRW $695 B. USD |
13% | 16% | -23%
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¹ 9/30/04 conversion rate 1 US Dollar = 1,152.60 South-Korean Won
² 6/30/04 conversion rate 1 US Dollar = 1,151.40 South-Korean Won
³ Operating Margin is blended handsets and infrastructure
Samsung Handset Unit Sales (v. Nokia) in Q3 2004
Samsung sold-in 22.69 million handsets in Q3 ....
... essentially flat from Q2 when they shipped 22.7 million units.
This compares to Nokia whose unit sales increased from 45.4 million units in Q2 to 51.4 million units in Q3, an increase of 6 million units, an increase of 13.2% QoQ for Nokia.
Clearly Nokia is winning back share from Samsung, and all indicators are that the gap will widen in Q4.
However, Samsung's combined sales of handsets in the first three quarters have surpassed the total sales of last year and Samsungexpects to add 2 to 3 percentage points to last year's ~11 percent global share.
Samsung has reported sales of 65.45 million handsets YTD v. Nokia's reporting of ~141 million.
Samsung expects to ship over 86 million handsets this year (about 21 to 23 million in Q4 evidently) and Nokia will probably ship over 200 million with a record 60 to 63 million anticipated in Q4.
Samsung Handset Revenue and ASP (v. Nokia) in Q3 2004
Samsung handset revenue totaled $3.965 billion in Q3, slightly down from $4.004 billion in Q2. ASP was essentially flat, and while Samsung GSM ASP in Europe was up from 2Q $176 to 3Q $178, and CDMA ASP in Korea increased from 2Q $299 to 3Q $326, clearly ASP elsewhere (US, China, India) was under significant pressure.
This compares to Nokia whose handset sales increased from $6.157 billion (€5.095 Bil.) Q2 to USD $6.801 Bil. (€5.515 Bil.) in Q3, an increase of USD $.644 Bil (€.420 Bil.), an increase of 8.2% QoQ for Nokia despite a reduced ASP from $136.89 USD (€113) in Q2 to $132.32 USD (€107.30) in Q3(-3.3% QoQ).
Samsung Operating Margin (v. Nokia) in Q3 2004
Samsung operating margin for the telecom unit declined from an almost inexplicable 25.9% in Q1 to 16% in Q2 to 13% in Q3 (-23% QoQ).
Samsung's third-quarter operating profit margin of 13% was its lowest since the first-quarter of 2001.
Samsung does not separate handset revenue from network revenue but handset revenue represented 93.3% of their telecom division revenue in Q3 compared to 79.5% for Nokia.
By contrast Nokia's handset operating margin increased from 13% in Q2 to 15.3% in Q3 (+ 30% QoQ), and networks had an operating margin of 12.3% for a blended total of 13.4%.
In their earnings CC Samsung stated that operating profit decreased due to higher marketing expenses (increase in co-marketing expenses with major carriers including Olympics marketing), and a continuous increase in R&D investments.
In that earnings CC, Samsung refrained from commenting on margin direction going forward. They are however under margin pressure, and that is likely to continue going forward into Q4, particularly since they have just entered the Indian CDMA mass market with some low end models, and Nokia is already beginning to strengthen their mid-range and upper mid-range.
Samsung Sell-In v. Sell-Through (v. Nokia) for H1 2004
Here is how Strategy Analytics credits Samsung Sell-In Q1 Quarter to Q2 Quarter and H1 (on 309.4m total units) in 2004 (pretty much in line with what Samsung reported).
Q1 2004 Q1 2004 ¦ Q2 2004 Q2 2004 ¦ H1 2004 H1 2004
Company Sales Share ¦ Sales Share ¦ Sales Share
======= ======= ====== ¦ ====== ===== ¦ ====== =====
1 Nokia 44.7m 29.2% ¦ 45.4m 28.9% ¦ 90.1m 29.1%
2 Motorola 25.3m 16.5% ¦ 24.1m 15.4% ¦ 49.4m 15.9%
3 Samsung 20.1m 13.1% ¦ 22.7m 14.5% ¦ 42.8m 13.8%
Here is how Gartner credits Samsung Sell-Through (excluding ODM to OEM shiments) Q1 Quarter to Q2 Quarter and H1 (on 309.4m total units) in 2004.
Q1 2004 Q1 2004 ¦ Q2 2004 Q2 2004 ¦ H1 2004 H1 2004
Company Sales Share ¦ Sales Share ¦ Sales Share
======= ======= ====== ¦ ====== ===== ¦ ====== =====
1 Nokia 44.2m 28.9% ¦ 46.4m 29.7% ¦ 90.6m 29.3%
2 Motorola 25.1m 16.4% ¦ 24.6m 15.8% ¦ 49.7m 16.1%
3 Samsung 19.1m 12.5% ¦ 18.9m 12.1% ¦ 38.0m 12.3%
There were some implications in the CC that Samsung inventories in channels might be higher than normal and that they would be taking action to correct this in Q4.
Asia Pulse Pte Ltd commented on Samsung's Q3:
tinyurl.com
For the third-quarter, Samsung Electronics' operating profit margin of its handset division fell to 13 percent, its lowest since the first-quarter of 2001. ... Stiff competition in the global handset market, including a price war led by Nokia, the world's largest handset maker, has undermined Samsung Electronics' profitability in this sector, analysts said. The average selling price of Samsung Electronics' cellular phones was about $178 a unit for the third-quarter, far below last year's $199. The company sold 22.69 million mobile phones in the three months ended September 30, earning 4.8 trillion won (US$4.19 billion) from cell-phone sales. In the nine months of this year, Samsung Electronics, ranked as the world's third biggest mobile phone vendor after Nokia and Motorola, selling a total 65.45 million handsets, surpassing its 2003 shipments of 55.66 million units. Samsung Electronics' Chu said in a conference call the company expects to sell 86 million handsets next year.
UPI commented on Samsung's Q3:
tinyurl.com
Mobile handset and telecom business fell 2 percent to 4.82 trillion won ($4.20 billion) in sales from 4.94 trillion won ($4.31 billion) in the second quarter. Handset sales reached 22.7 million phones in the quarter, earning 4.8 trillion won ($4.2 billion) from the mobile phone sales. The prospect of Samsung's telecoms business looks gloomy because it is facing stiff competition in the global market and sluggish demand at home. Nokia, the world's largest cell phone maker, has slashed prices on some handsets while it prepares to introduce a new range of products, in an effort to expand its global market share.... But Samsung, armed with the combination camera and color-screen phones that consumers want, expects its global phone market share to rise to 14 percent in 2004 from 11 percent last year, and is confident it can exceed its 86 million sales target, closing in on second-ranked mobile maker Motorola Inc. ... But Kim Hi-yon, an economist at Hyundai Securities, said Nokia's aggressive marketing with new models could further erode Samsung's share in the European market.
Bloomberg commented on Samsung's Q3:
tinyurl.com
Telecommunications operating profit shrank 18 percent from a year ago and 23 percent quarter-on-quarter to 610 billion won as handset sales rose 52 percent from a year ago to 22.7 million units, the company said. ... <snip> ... The growth in mobile-phone sales will slow next year to 2.5 percent, or 655 million units, from a gain of 22 percent this year, according to Credit Suisse First Boston. ... Nokia Competition: Samsung, which had the fastest sales growth among the world's top three handset vendors this year, is facing increased competition from industry leader Nokia, which cut prices this year to regain market share. In September, Nokia raised its third- quarter earnings and sales forecasts. ... Samsung's export prices for handsets averaged $178 in the third quarter, up from $176 in the second quarter, the company said. Still, competition in the handset market is getting stiffer, Chu said. Samsung expects handset sales for all of 2004 to exceed its 86 million unit forecast. ... Nokia's price cuts have eroded Samsung's profit. During the second quarter, Samsung generated 16 cents of operating profit for each dollar of telecommunications sales, down from 26 cents in the first quarter. Samsung got 26 percent of its operating income from telecommunications this year. ...
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- Eric - |
