BREAKING..Samsung Profit Skyrockets 130% on Surging Sales of 57.7 million SmartPhones
By Jun Yang on October 25, 2012
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businessweek.com
Samsung Electronics Co. (005930), the world’s biggest maker of TVs and mobile phones, reported third-quarter profit that beat analysts’ estimates as surging sales of Galaxy smartphones helped widen the lead over Apple Inc. ( AAPL)’s iPhone.
Net income in the three months ended Sept. 30 totaled 6.56 trillion won, the Suwon, South Korea-based company said in a statement today. The average of 27 analysts’ estimates compiled by Bloomberg was 6.25 trillion won.
Earnings at the mobile-phone business increased after the introductions of the Galaxy S III phone and the Note II helped the company compete against Apple, a key customer and opponent in patent lawsuits on four continents. Asia’s biggest consumer- electronics maker is introducing new TVs with 3-D and Internet surfing technologies to shield its earnings from slumping demand for computer-memory chips.
“Smartphones will continue leading growth into next year,” Brian Park, a Seoul-based analyst at Tong Yang Securities Inc., said by phone before today’s announcement. “The semiconductor side is not showing a clear recovery, but smartphones held up well this year. It’ll be a similar story next year.”
Operating profit was 8.12 trillion won, in line with the 8.1 trillion won preliminary figure Samsung disclosed on Oct. 5. Sales totaled 52.18 trillion won.
Operating profit at the telecommunications business more than doubled to 5.63 trillion won from 2.42 trillion won, the company said in the statement. That compared with the 5.42 trillion-won median of four analyst estimates compiled by Bloomberg News. Sales at the unit totaled 29.9 trillion won.
Samsung probably shipped 57.7 million smartphones in the third quarter, according to Seoul-based Daishin Securities Co. That would surpass the 50.5 million units the company shipped in the previous quarter, a record for a single vendor, according to estimates from industry researcher Strategy Analytics.
Sales of the Galaxy S III surpassed 20 million units in the 100 days after its May debut, Samsung said Sept. 6. The company also is marketing the Galaxy Note II phone, equipped with a pen and a larger screen than the S III, after the first version sold more than 10 million units.
Samsung’s “earnings momentum will remain in place” in the fourth quarter even as competition among smartphone makers intensifies, Jeff Kang, a Seoul-based analyst at Daishin said in an Oct. 8 report.
$1 Billion DamagesApple, lagging behind only Samsung in the $219 billion global smartphone market, last month started selling the iPhone 5 with a bigger screen, lightweight body design and faster processor than previous models. On Oct. 23, the company unveiled a smaller, cheaper version of the iPad tablet.
Cupertino, California-based Apple reported debut weekend sales of more than 5 million units for the iPhone 5, falling short of some analysts’ estimates after supply constraints delayed shipments.
Samsung and Apple are also battling in court over patents protecting their devices, with each accusing the other of copying their intellectual property.
The companies have traded victories ( AAPL), with Apple winning more than $1 billion in damages Aug. 24 after a jury in San Jose, California, ruled that the South Korean company infringed six of seven patents at stake in the trial. Samsung subsequently requested a dismissal of the August jury verdict, saying the trial was tainted by the foreman’s failure to disclose a lawsuit and his personal bankruptcy.
Texas FactoryApple is seeking a U.S. ban on some Galaxy products.
Separately, a U.K. court ruled that Samsung’s Galaxy tablets weren’t “cool” enough to be confused with the iPad. Apple’s appeal was rejected.
Samsung is also the biggest manufacturers of computer- memory chips.
Profit at the semiconductor division fell to 1.15 trillion won from 1.59 trillion won amid a decline in global personal- computer demand. The four analysts surveyed by Bloomberg News estimated a median profit of 1.16 trillion won.
The price of the benchmark DDR3 2-gigabit DRAM averaged 84 cents in the July-September period, compared with $1.08 a year earlier, according to data from Taipei-based DRAMeXchange, operator of Asia’s largest spot market for semiconductors.
IPhone ChipsDuring the period, global PC shipments fell 8.3 percent from a year earlier to 87.5 million, according to Gartner. IDC reported an 8.6 percent decline.
The price drop pushed Micron Technology Inc. ( MU), which has agreed to buy Japan’s Elpida Memory Inc. to double its market share in the computer-memory business, to report a fourth- quarter loss wider than a year earlier.
As DRAM demand slumps, Samsung is accelerating its diversification to more profitable products used in mobile devices. The company, the biggest semiconductor supplier for Apple and the exclusive manufacturer of processors powering the iPhone, said in August it will invest about $4 billion in its Texas factory to boost output of the processors in smartphones and tablet computers.
Samsung also has cut supplies to Apple amid their global patent fight. The South Korean company wouldn’t supply memory chips for the first shipments of the iPhone 5 after a disagreement about pricing, a person familiar with the matter said in September. Samsung’s displays also wouldn’t be included in initial batches of the smartphone, a second person familiar with the matter said then.
Samsung’s display business had an operating profit of 1.09 trillion won, compared with a loss of 90 billion won a year earlier. The median of the four analysts’ estimates was a profit of 909 billion won.
‘Smart’ TVsThe company is benefitting from demand for displays used in mobile devices as sales of flat-screen TVs stagnate. Sales of mid- to small-sized screens probably accounted for about 60 percent of operating profit at the display business, according to estimates by Hanwha Investment & Securities Co.
The TV business had an operating profit of 430 billion won on sales of 11.6 trillion won, the company said.
Samsung is introducing new technologies including OLED, 3-D and Internet-enabled TVs to reverse slowing industry sales. The sets using OLED, or organic light-emitting diode, technology can produce sharper and brighter images than current liquid-crystal- display models.
Shipments of Web-connected, or “smart,” TVs probably will grow 15 percent globally this year, according to DisplaySearch, part of NPD Group. Global TV shipments fell 8 percent in the second quarter from a year ago after declining last year for the first time since 2004, according to the research company. |
