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To: slacker711 who wrote (4268)	10/16/2006 5:18:48 PM
From: Eric L	Read Replies (1) \| Respond to of 9255

Samsung in Q3 2006 << We'll need to wait for the CC for more details, but Samsung's report looks fairly bullish. A total of 30.7 million handsets with ASP's increasing sequentially and an 11% operating margin. >> They came in pretty much as I anticipated, although I thought operating margin might be a bit better, and especially given their export sales ASP lift. 11% isn't bad in this industry, but it remains low by Samsung standards. Despite the fact that unit shipments were a record 30.7M (+15% YoY), and while ASP was healthy, handset revenue only increased 2% YoY. This comment in R.M. Schneiderman's Samsung article for Forbes [clipped below] really sticks out and I'm wondering how he came by these estimated shares. In the mobile phone market, the company saw its market share rise to 11.9% from 10.9%. I'm unaware of anyone estimating Samsung share as low as 10.9% in any quarter in recent memory, although perhaps he's pulling it from Tim Long who he references and whose global market demand numbers are always pretty aggressive. Strategy Analytics (SA) credited Samsung with 11.2% sell-in share on their Q2 stumble and had them finishing 2005 with 12.6% share for the year. IDC had Samsung sell-in share in Q2 at 11.1%. Gartner had Samsung Q2 sell through at 11.1%. Here's the last 4 quarters through Q2 according to SA ... YoY Sell-In Q2 '05 Q3 '05 Q4 '05 2005 Q1 '06 Q2 '06 Gain / Loss ========== ====== ====== ====== ====== ====== ====== ========== Samsung 24.4m 26.8m 27.2m 102.9m 29.0m 26.3m 1.9m 8.2% 13.0% 12.8% 11.1% 12.6% 12.8% 11.2% -1.8 ppt. I'm currently optimistically guesstimating global Q3 unit sell-in of 246 million units, up from Strategy Analytic's estimated 235.3 million units in Q2 2006, up 4.5% QoQ, and up 17% from 210.2m units in Q3 2005. On that basis Samsung will achieve ~12.5% global share (+1.3 ppt.) this quarter, a solid improvement over Q2, but a loss of 0.3 percentage points share from Q3 2005 when they shipped 26.8 million units, and marginally down from the 12.6% global share they achieved for calendar year 2005 on unit sales of 102.9 million. You probably saw Bob Faulkner's Samsung comment on RealMoney this morning ... "They're also suggesting they may exceed their target for shipping 115M units in 2006. However, they've already shipped 86M, so they could beat the target but still be DOWN SEQUENTIALLY." He's right about that. To achieve 115 million units they only need 29 million units in Q4. I don't see them failing to achieve that marker, but they'll need to blow it out to recover annual share to CY2005 level. Thinking optimistacally again, I think that that Q4 will see a 15% seasonal lift and if so that would mean Samsung will need 35 million units in Q4 to maintain share at the Q3 level. This abstract below is from the Q3 slides you linked ... tinyurl.com Samsung Q3 Sales (Trillion, KRW) · 3Q ’06 Q-on-Q 2Q ’06 3Q ’05 YoY ====== ====== ====== ====== === Telecom 4.71 10% 4.28 4.58 3% Handsets 4.45 10% 4.04 4.37 2% · Samsung Q3 Operating Profit · 3Q ’06 Q-on-Q 2Q ’06 3Q ’05 YoY ====== ====== ====== ====== === Telecom 0.52 29% 0.41 0.55 -5% (Margin) (11%) - (10%) (12%) - · Samsung Telecommunication Q3 Results Analysis · Handsets · • Shipment of 30.7 million units · - Up from 26.3 million units (+4.4m units) in Q2 2006 (+17% QoQ) · - Up from 26.8 million units (+3.9m units) in Q3 2005 (+14.5% YoY) · - Overseas: Surge of quarterly shipment due to strong sales to the major carriers in the US and “Ultra Edition” in Europe. · - Korea: Increased shipment due to strong sales of slim and DMB phones · • ASP : Export/Domestic · - Exports: ASP increase triggered by the success of “Ultra Edition” -- ASP (USD): Q2 $167 --> Q3 $175 · - Domestic: Reduced effect of renewed subsidy commenced in Q2 resulted in higher sales of mid-priced phones -- ASP (KRW): Q2 374K --> Q3 343K · Networks · • Sequential sales growth coming from domestic WCDMA & WiBro and Japanese CDMA network sales · • Established foot-hold for Mobile WiMAX infrastructure business in US with Sprint · Telecommunication Business Outlook · Market · • Expansion of WCDMA/HSDPA services and new handset introductions are expected to fuel the market growth during the peak sales season · - Overseas: Market is expected to grow sequentially due to the strong Christmas demand in Europe & N.A. · - Korea: Inventory adjustments of service providers are expected to result in contraction of the market size · • Global handset market for ‘06 is expected to exceed 950 mn. mainly due to the strong growth in emerging market · Samsung · • Expect to exceed the annual shipment target of 115 mn. in ’06 • Shipment and ASP are expected to improve as sales of flagship models increase in Q4 · - Exports: Strong sales of “Ultra Edition” and other mid/high-end models · - Target to launch about 30 new models including HSDPA, Mobile TV and smart phones >> Samsung Q3 Bodes Well For Wireless Sector: Analyst R.M. Schneiderman Forbes Market Scan 10.16.06 tinyurl.com Samsung's strong third-quarter results are a sign of good things to come for the mobile-phone sector, according to an analyst. "We believe Sony Ericsson and Samsung gained the most market share in the third quarter, while Motorola and Nokia should be flat to slightly up," said Tim Long, an analyst for Banc of America, in a recent report. "We see improved global outlook as a sign that the global handset market remains healthy, which should benefit Motorola, Nokia and Qualcomm, in our view." Early Monday morning, Samsung reported net income of $2.3 billion on revenue of roughly $16 billion. Leading the way was its semiconductor division, which saw operating profits increase 29.5% quarter-over-quarter primarily due to strong demand for computer memory chips. In the mobile phone market, the company saw its market share rise to 11.9% from 10.9%. Samsung's results come after rival Sony Ericsson said earnings almost tripled for the third quarter due to rising demand for its camera and music phones. Matthew Hoffman, an analyst at Cowen and Company, said that doesn't mean Nokia and Motorola lost market share. "[Our] latest checks shows the handset market indeed reaccelerated in September," the analyst said in an Oct. 13 report. "We remain constructive longer-term on Motorola because we believe the fourth quarter results, if not guidance, will exceed expectations," he said. Motorola (nyse: MOT) is set to report third quarter earnings on Oct 17, while Nokia (nyse: NOK) will report on Oct. 19. Qualcomm (nasdaq: QCOM) should report its fourth quarter results on Nov. 2. << - Eric -