Samsung's Smartphone Sales Surpass Apple's
Samsung's Smartphone Sales Surpass Apple's
Samsung Electronics Co.'s third-quarter net profit fell 23%, the company said on Friday, but that was less than expected as strong sales of smartphones offset weakness in other consumer products and electronic components.
Samsung in the July-to-September period surpassed Apple Inc. as the leading seller of smartphones by shipping around 28 million, about four times the number it achieved a year earlier, in a rapid transformation of its biggest business by sales. Apple said earlier this month it shipped around 17 million smartphones in the same period.
Samsung in the period also closed in on Nokia Corp. as the world's largest seller of all cellphones.
Samsung's telecom division, which accounted for 36% of revenue, provided more than half of the firm's operating profit and experienced its best profit margin since 2004. Smartphones provided about 31% of the division's revenue and more than 80% of its operating profit, analysts estimate.
According to market research firm Strategy Analytics, global smartphone shipments in the third quarter grew 44% from a year earlier to reach a record 117 million units. It said Samsung's share of the smartphone market rose to 23.8% during the quarter from 9.3%, while Apple's market share fell to 14.6% from 17.4%. Nokia Corp. saw its share fall sharply to 14.4% from 32.7%.
Meanwhile, the performance of Samsung's chip division, traditionally its biggest source of profits, fell, though not as sharply as expected. Sales of memory chips for higher-margin servers in data centers helped the unit overcome weaknesses in chips for personal computers.
Regarding the severe floods in Thailand, a Samsung executive said the disaster would weigh on sales of personal computers in the fourth quarter due to slower supply of hard drives, but said it will also boost demand for solid-state drives and NAND flash memory chips.
Executives said they expected the fourth quarter to remain solid as demand for smartphones will remain high and sales for other consumer electronics products will enter their yearly peak season. Samsung is on track to report its second-biggest annual net profit ever after last year's record 16.2 trillion won ($14.64 billion).
Samsung's third-quarter net profit amounted to 3.44 trillion won, or $3.11 billion, in the July-September period. Samsung earned 4.46 trillion won in the same period a year earlier. Revenue was 41.27 trillion won, up 3% from 40.23 trillion won a year earlier.
The net figure was higher than the average 3.20 trillion won net profit forecast in a poll of six analysts by Dow Jones Newswires. The results helped boost Samsung's share price to 934,000 won, up 1.1% at 1:34pm local time, outpacing the Kospi's 0.5% rise.
The company since April has been engaged in a high-profile legal battle with Apple over smartphone and tablet computer patents and lost some preliminary court rulings in several countries. But Friday's results showed the dispute has had little impact on its performance.
Samsung's telecom unit reported operating profit of 2.52 trillion won, about 59% of the company's overall operating profit of 4.25 trillion won.
Although the Korean electronics giant didn't provide an overall capital expenditure plan for next year, it said investment in non-memory chips and advanced flat displays is expected to increase sharply from this year.
Earlier this year, parent company Samsung Group budgeted 43.1 trillion won for investments in 2011, up 18% from the 36.5 trillion won spent in 2010. At that time, South Korea's biggest conglomerate said it would invest 10.3 trillion won of the total in the semiconductor sector this year. Samsung had originally planned to spend around 5.8 trillion won on its memory chip business this year and use the remainder for non-memory chip operations.
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