Tags: Samsung | Profit | Galaxy | IPhone 5

Samsung Beats Profit Estimates as Galaxy Fends Off IPhone 5

Monday, 07 January 2013 07:31 PM

Samsung Electronics Co., the world’s largest maker of mobile phones and TVs, reported higher-than-expected fourth-quarter earnings as sales of Galaxy smartphones withstood the debut of Apple Inc.’s iPhone 5.

Operating profit rose 89 percent to 8.8 trillion won ($8.3 billion) in the three months ended December, Samsung said in a preliminary earnings statement Tuesday. That compares with the 8.5 trillion won average of 35 analyst estimates compiled by Bloomberg. The Suwon, South Korea-based company didn’t give net income or divisional figures.

Earnings at Samsung’s mobile business probably doubled from a year earlier, according to a Bloomberg News survey of five analysts, helped by demand for Galaxy Note II and Galaxy S III phones. That contrasted with slower than expected sales of the iPhone 5, which entered the market in September, following glitches with mapping software.

“Samsung benefited the most from slower iPhone 5 sales combined with brisk sales of its own smartphones,” Park Hyun, an analyst at Tong Yang Securities, said before the earnings announcement. “Apple’s popularity isn’t what it was.”

Apple probably fell short of an anticipated 50 million iPhone 5 sales in the fourth quarter, Park said. Samsung is also in a global patent legal fight with Cupertino, California-based Apple, its biggest competitor in the mobile-phone market and its largest customer.

Samsung, which will announce audited results later this month, fell 0.3 percent to close at 1,520,000 won in Seoul trading Monday. It surged 44 percent in 2012, compared with a 31 percent gain for Apple in New York.

Phone Profit

Fourth-quarter operating profit at Samsung’s telecommunications unit, its biggest profit driver, probably rose to 5.72 trillion won after sales increased 51 percent, according to the Bloomberg News survey. The display unit also likely made a 1.06 trillion won profit compared with a loss a year earlier, according to the survey.

Asia’s biggest consumer-electronics company probably increased marketing spending for the year-end shopping season to better compete with new products from Apple and other rivals, Park said.

Samsung probably shipped 63 million smartphones in the final quarter of the year, according to an estimate by Seoul- based LIG Investment & Securities. The company sold 56.9 million smartphones the preceding three months, compared with Apple’s 26.9 million, according to October estimates from market researcher Strategy Analytics.

New Models

“Samsung is expected to roll out its new Galaxy S4 device in the second quarter of 2013, which may reduce Galaxy S3 sales in the first quarter, but Samsung will maintain its top position in the global handset market on stronger sales of its mid-end smartphones,” said Kim Hyoung Sik, an analyst at Taurus Investment & Securities.

Sales of the Galaxy S III reached 30 million units five months after it was introduced in late May, Samsung said in a Nov. 4 statement. The company is also reaping profits from its Galaxy Note II phone-tablet device, introduced in late September, which reached sales of more than 5 million units as of late November, the company said on Nov. 26.

Court Ruling

A U.S. court also last month ruled against Apple’s bid to block sales of some Samsung devices, fueling speculation that a $1.05 billion damage award Apple won in a lawsuit against the Korean company in August could be reduced.

U.S. District Judge Lucy H. Koh in San Jose, California, said in a Dec. 18 ruling that the U.S. company failed to establish that consumer demand for Samsung products was driven by technology stolen from Apple.

The European Union is also probing whether Samsung violated agreements to license key patents to other mobile-phone makers on fair terms. Samsung said last month it’s withdrawing injunction requests against Apple in Europe involving key patents it holds for wireless communications, citing “the interest of protecting consumer choice.”

Samsung, the world’s biggest supplier of ultra-thin organic light-emitting diode, or OLED, displays, probably saw rapid growth at its display business in the final three months of 2012, largely driven by sales of its own mobile devices, David Choi, an analyst at SK Securities, said before the earnings announcement.

The unit had an operating profit of 1.06 trillion won, compared with a loss of 220 billion won a year earlier, according to the Bloomberg News survey.

Chip Profit

Operating profit at Samsung’s chip business was estimated at 1.52 trillion won in the fourth quarter, down from the 2.31 trillion won a year earlier, according to the survey.

Earnings at Samsung’s consumer-electronics business, including TV operations, probably fell to 530 billion won from 620 billion won a year earlier, while sales were probably unchanged as consumers put off purchases of expensive TVs such as sets with voice-recognition capability or three-dimensional screens, according to the Bloomberg News survey.

Global TV demand probably fell more than 4 percent last year and will be little changed in 2013, researcher DisplaySearch said Oct. 24.

© Copyright 2018 Bloomberg News. All rights reserved.

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Samsung Electronics Co., the world's largest maker of mobile phones and TVs, reported higher-than-expected fourth-quarter earnings as sales of Galaxy smartphones withstood the debut of Apple Inc.'s iPhone 5.
Samsung,Profit,Galaxy,IPhone 5
Monday, 07 January 2013 07:31 PM
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