Samsung Profit Beats Estimates on Surging Sales of Phones

Samsung Electronics Co. (005930), the world’s biggest maker of TVs and mobile phones, reported third-quarter profit that beat analysts’ estimates as surging sales of Galaxy smartphones helped widen the lead over Apple Inc. (AAPL)’s iPhone.

Net income in the three months ended Sept. 30 totaled 6.56 trillion won, the Suwon, South Korea-based company said in a statement today. The average of 27 analysts’ estimates compiled by Bloomberg was 6.25 trillion won.

Earnings at the mobile-phone business increased after the introductions of the Galaxy S III phone and the Note II helped the company compete against Apple, a key customer and opponent in patent lawsuits on four continents. Asia’s biggest consumer- electronics maker is introducing new TVs with 3-D and Internet surfing technologies to shield its earnings from slumping demand for computer-memory chips.

“Smartphones will continue leading growth into next year,” Brian Park, a Seoul-based analyst at Tong Yang Securities Inc., said by phone before today’s announcement. “The semiconductor side is not showing a clear recovery, but smartphones held up well this year. It’ll be a similar story next year.”

Galaxy, IPhone 5

Samsung probably shipped 57.7 million smartphones in the third quarter, according to Seoul-based Daishin Securities Co. That would surpass the 50.5 million units the company shipped in the previous quarter, a record for a single vendor, according to estimates from industry researcher Strategy Analytics.

Sales of the Galaxy S III surpassed 20 million units in the 100 days after its May debut, Samsung said Sept. 6. The company also is marketing the Galaxy Note II phone, equipped with a pen and a larger screen than the S III, after the first version sold more than 10 million units.

Samsung’s “earnings momentum will remain in place” in the fourth quarter even as competition among smartphone makers intensifies, Jeff Kang, a Seoul-based analyst at Daishin said in an Oct. 8 report.

Apple, lagging behind only Samsung in the $219 billion global smartphone market, last month started selling the iPhone 5 with a bigger screen, lightweight body design and faster processor than previous models. On Oct. 23, the company unveiled a smaller, cheaper version of the iPad tablet.

Cupertino, California-based Apple reported debut weekend sales of more than 5 million units for the iPhone 5, falling short of some analysts’ estimates after supply constraints delayed shipments.

$1 Billion Damages

Samsung and Apple are also battling in court over patents protecting their devices, with each accusing the other of copying their intellectual property.

The companies have traded victories, with Apple winning more than $1 billion in damages Aug. 24 after a jury in San Jose, California, ruled that the South Korean company infringed six of seven patents at stake in the trial. Samsung subsequently requested a dismissal of the August jury verdict, saying the trial was tainted by the foreman’s failure to disclose a lawsuit and his personal bankruptcy.

Apple is seeking a U.S. ban on some Galaxy products.

Separately, a U.K. court ruled that Samsung’s Galaxy tablets weren’t “cool” enough to be confused with the iPad. Apple’s appeal was rejected.

Samsung is also the biggest manufacturers of computer- memory chips.

Texas Factory

The price of the benchmark DDR3 2-gigabit DRAM averaged 84 cents in the July-September period, compared with $1.08 a year earlier, according to data from Taipei-based DRAMeXchange, operator of Asia’s largest spot market for semiconductors.

During the period, global PC shipments fell 8.3 percent from a year earlier to 87.5 million, according to Gartner. IDC reported an 8.6 percent decline.

The price drop pushed Micron Technology Inc. (MU), which has agreed to buy Japan’s Elpida Memory Inc. to double its market share in the computer-memory business, to report a fourth- quarter loss wider than a year earlier.

As DRAM demand slumps, Samsung is accelerating its diversification to more profitable products used in mobile devices. The company, the biggest semiconductor supplier for Apple and the exclusive manufacturer of processors powering the iPhone, said in August it will invest about $4 billion in its Texas factory to boost output of the processors in smartphones and tablet computers.

TV Technologies

Samsung also has cut supplies to Apple amid their global patent fight. The South Korean company wouldn’t supply memory chips for the first shipments of the iPhone 5 after a disagreement about pricing, a person familiar with the matter said in September. Samsung’s displays also wouldn’t be included in initial batches of the smartphone, a second person familiar with the matter said then.

The company is benefitting from demand for displays used in mobile devices as sales of flat-screen TVs stagnate. Sales of mid- to small-sized screens probably accounted for about 60 percent of operating profit at the display business, according to estimates by Hanwha Investment & Securities Co.

Samsung is introducing new technologies including OLED, 3-D and Internet-enabled TVs to reverse slowing industry sales. The sets using OLED, or organic light-emitting diode, technology can produce sharper and brighter images than current liquid-crystal- display models.

Shipments of Web-connected, or “smart,” TVs probably will grow 15 percent globally this year, according to DisplaySearch, part of NPD Group. Global TV shipments fell 8 percent in the second quarter from a year ago after declining last year for the first time since 2004, according to the research company.

Full article:

http://www.bloomberg.com/news/print/2012-10-25/samsung-profit-beats-estimates-on-surging-sales-of-phones.html

PS.  So what market share will it be for many players like Samsung, Apple, RIM, Microsoft, Android.....some will shine forward and gain share as others will either lose share and become less of significance or remain okay in their share of markets.  Looks like for now Samsung, Apple, Microsoft, Android will do okay to well as RIM is still lagging behind unless BB10 is a great product.  Imho, I find it hard to believe since millions of people are already in many of the better echo systems as RIM has missed many deadline of their BB10 and has sat on their laurels too long to make any dent in the market share pie as they fell off of it long ago when others like Apple, and others became more significant to the marketplace with their products.

Cheers,

Dave.