Smartphone rings up Samsung profit
Samsung Electronics, the world's top technology firm by revenue, has reported a record operating profit of $5.9 billion for the June quarter, as rampant Galaxy S handset sales helped stretch its lead over Apple.
September quarter mobile profits are expected to forge further ahead as the latest Galaxy model enjoys a sales boom before the next iPhone launch, widely expected in October, driving Samsung's profit to a record of nearly 8 trillion won (€5.7 billion).
The mobile business brings in around 60 per cent of Samsung's earnings.
Profits of the handset division more than doubled from a year earlier and the flat-screen business swung to a profit as LCD prices stabilised.Shares in Samsung, which also makes TVs and other appliances, flat-screens, and chips, jumped as much as 4.7 per cent to a five-week high after the results, outperforming the wider market.
"Solid results from the TV division show its resilience to the euro zone crisis, while the mobile division has become a strong cash cow on the back of strong Galaxy sales," said Seo Won-seok, an analyst at Korea Investment & Securities.
"Weak memory chip prices remain the biggest concern for Samsung in the third quarter, but it will again fare better than rivals as its reliance on Apple, which tends to squeeze suppliers quite a bit, is small compared to the likes of Hynix and Toshiba. It'll have less margin pressure."
JK Shin, head of Samsung's telecoms business, said that sales of the Galaxy S III, the most aggressive competitor to the iPhone, were better than his initial forecast of at least 10 million units in the first two months after its launch in late May.
It is also preparing a sequel to the popular phone-cum-tablet Galaxy Note later this year to counter Apple's new product releases.
Samsung, which earlier this year ended Nokia's 14-year reign as the top global handset maker, is estimated to have increased smartphone shipments to 50.5 million in the June quarter, nearly double the 26 million iPhones sold.
Apple shipments in the June quarter tumbled 26 per cent sequentially as the European economy sagged and consumers held off on buying ahead of the release of the iPhone 5.
"Regardless of Apple's performance, Samsung will be strong in the third quarter," said Byun Han-joon, an analyst at KB Investment & Securities. "Actually, for Samsung, Apple's stumble is a chance."
Analysts estimated that Samsung, which now controls more than a third of the global smartphone market, will sell 15 million to 20 million of its Galaxy S III in the September quarter.