Samsung record profit on Galaxy phones

Samsung,world's largest tech firm by revenue,reported another record-high profit.

Written by Agencies | Seoul | Published: July 27, 2012 10:49:29 am

Samsung,the world’s largest technology firm by revenue,reported another record-high quarterly profit as customers flocked to Galaxy smartphones amid the absence of competitors,which helped the South Korean firm outdo rivals even at one of the most challenging times for the global tech industry.

Samsung Electronics Co. said Friday its net profit reached a record-high of 5.2 trillion won ($4.5 billion) in the three months ending in June,a 48 percent jump from a year earlier.

But the bottom line was lower than a median market consensus of 5.6 trillion won based on a poll of seven analysts by Yonhap Infomax.

Its second-quarter operating profit spiked 79 percent over a year earlier to 6.7 trillion won and its revenue rose 21 percent to 47.6 trillion won,matching Samsung’s guidance released earlier this month. The operating profit,also at an all-time high,marked a 15 percent rise from the previous quarter.

Shares of Samsung opened 1.9 percent higher in Seoul after the quarterly financial results announcement.

Samsung,the world’s largest maker of mobile phones,televisions and memory chips,benefited from runaway demand for its Android-powered smartphones,as rivals including Apple were slow to release new models.

Robust sales of Samsung’s high-end mobile gadgets,including the flagship Galaxy S3 smartphone,helped Samsung tide over a slowdown in other consumer electronics sectors such as televisions and personal computers that have been painful for its rivals and component suppliers.

Despite nagging worries about debt-crippled Europe,analysts are expecting Samsung to renew its record-high profit in the third quarter when Galaxy S3 sales reach its peak before Apple unveils its new iPhone,largely anticipated in October.

“The third quarter is expected to be marginally positive as demand for consumer electronics goods,including smartphones and tablets,remains strong and a stream of new products hit the market. Supply for display panels is also expected to increase,as TV makers prepare for the year-end holiday season,” Samsung said in a statement.

In the second quarter,Samsung’s mobile business contributed 63 percent of Samsung’s entire operating profit by generating 4.2 trillion won profit. Analysts guess Samsung sold around 50 million smartphones in the second quarter,including about 6.5 million Galaxy S3 phones.

Although the company does not release its mobile-phone sales figures,Samsung probably outperformed competitors in the top-end smartphone segment,while having a tougher time competing with Chinese brands such as ZTE and Huawei in the low-end smartphone markets,analysts said.

Samsung’s stellar results come a few days after Apple made a rare miss in its quarterly earnings,as consumers snapped up cheaper iPhones or delayed purchase in anticipation of a new iPhone model.

Apple,which makes only one phone model,said it sold 26 million iPhones,up 28 percent from a year earlier. Samsung,which boasts a large breadth of mobile phone lineups with various screen sizes,designs and price ranges,likely beat Apple’s iPhone shipments by a larger margin in the April-June period than in the first quarter,said analyst Lee Sei-cheol at Meritz Securities. In the first quarter,Samsung was estimated to have beat Apple in smartphone shipments by about 10 million units.

The two companies are scheduled to meet on July 30 at a San Jose court for a U.S. trial on mobile patent lawsuits. Started in April 2010 when Apple accused the South Korean firm of copying its iPhone and iPad designs,the epic legal fights have expanded to about a dozen lawsuits in North America,Asia and Europe. Samsung charges Apple of violating its wireless technology patent.

Outside the courtroom,however,the two companies,which control more than half of the world’s smartphone market together,have a close business relationship. Samsung is a key supplier of mobile processors for Apple’s iPhone and iPad and Samsung’s component divisions also make display screens and mobile chips for Apple.

Outside the mobile market,Samsung made improvements in flat-screen and TVs but semiconductor profit declined on weak global demand for personal computers.

Samsung’s semiconductor division earned 1.1 trillion won in operating profit in the second quarter,compared with 1.8 trillion won a year earlier. Samsung is the world’s largest supplier of dynamic random access memory (DRAM) chips that help run multiple programs simultaneously in personal computers. The company said the recovery in demand for PC DRAM chips will be weaker than expected in the third quarter.

Its flat-screen division turned profitable over a year earlier,generating 750 billion won in profit as prices of liquid crystal display panels stabilized. It expects higher demand for TV panels for the rest of the year.

The division that makes televisions and home appliances made 760 billion won in operating profit,a 66 percent rise from a year earlier,as sales of high-end TVs rose in developed and emerging markets.

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