x Abu Dhabi, UAEWednesday 26 July 2017

Galaxy smartphones ring in record profit for Samsung

Samsung said it likely earned a quarterly profit of US$8.3 billion, as it sold close to 500 handsets a minute and as demand picked up for the flat screens it makes for mobile devices.

Samsung, the world leader in mobiles and memory chips, said it likely earned a quarterly profit of US$8.3 billion, as it sold close to 500 handsets a minute and as demand picked up for the flat screens it makes for mobile devices, including those for rival Apple products.

That run of five straight record quarters may end in January-March on weaker seasonal demand, though a strong pipeline of smartphones – the South Korean group's biggest earner – and improving chip prices have eased concerns that earnings growth could slow this year, powering Samsung shares to record levels last week.

"Investors are a bit concerned that Samsung's momentum may slow in the first half. The smartphone market is unlikely to sustain its strong growth as advanced markets are nearing saturation despite growth in emerging countries," said Kim Sung-soo, a fund manager at LS Asset Management.

Samsung has outpaced Apple – its biggest rival and biggest customer – despite the US firm's launch of the latest iPhone 5, with sales momentum boosted by its Galaxy Note II phone-and-tablet, or 'phablet', in the fourth quarter. IPhone 5 sales were a little below expectations, analysts said.

While Apple rolled out just a single new smartphone last year globally, Samsung bombarded the market with 37 variants tweaked for regional and consumer tastes, from high-end smartphones to cheaper low-end models. By comparison, Taiwan's HTC Corp released 18 models, Nokia 9 and LG Electronics 24.

HTC on Monday said its fourth-quarter profit slumped more than 90 per cent as its sales continue to trail those of the Galaxy range and the iPhone.

Samsung, valued at close to $230bn, gave its October-December earnings guidance on Tuesday, ahead of the full earnings release expected by January 25.

Shipments of Samsung's flagship Galaxy S III, which overtook the iPhone 4S in the third quarter to become the world's best-selling smartphone, are likely to have slipped to around 15 million in the last quarter from 18m in July-September, analysts estimate, but sales of around 8m Galaxy Note II 'phablets' should more than make up for that – pushing overall smartphone shipments to around 63m.

"The Note was selling well, boosting fourth-quarter profit, while iPhone 5 sales were less than expected," said Song Myung-sub, an analyst at HI Investment & Securities.

"Samsung's profit will drop in the current quarter because of decreased phone profits. It will launch the Galaxy S IV only in March or April so, without new models, phone sales prices will fall this quarter. For the whole year, Samsung will launch new models faster than Apple and have the upper hand in the smartphone market."

 

* Reuters