News Column

Samsung Reports a Galaxy of Smartphone Profits

Oct. 4, 2012

Russell Lynch

Booming sales of Galaxy smartphones put Samsung on course for another record quarter today as the South Korean giant shrugged off defeat in a legal battle with rival Apple.

The consumer electronics behemoth is set to shatter forecasts with profits of 8.1 trillion won (pounds sterling 4.5 billion) for the July-September period -- almost double last year and the fourth quarter of record profits in a row.

But the run looks as though it might come to an end in the present quarter as Apple hits back with the recent launch of its iPhone5. Industry watchers say 2012 could be the high-water mark for smartphone profits as the two main rivals slog it out in a price war next year.

Samsung overtook rivals Apple and Nokia last year as the world's biggest seller of smartphones. Its hugely popular Android smartphones and tablet computers now account for more than two-thirds of profits, outweighing weak demand for memory chips and fierce competition which has driven down margins on televisions.

Analysts reckon that Samsung managed to sell 60 million smartphones during the last quarter, including 18 million of the latest Galaxy S3 model released in May.

Despite the impressive earnings figures, analysts believe 2013 will be tougher as competition with Apple squeezes margins, and sales growth slows in developed countries where smartphones are now widespread.

Nomura analyst Marcello Ahn said: "The smartphone market is split between Samsung and Apple, with their operating profit margins staying high at 30 percent-50 percent at present. If price competition between the two intensifies, we think smartphone margins may decline at a pace faster than our expectations."

Samsung is meanwhile trying to overturn a US jury's verdict in August awarding $1 billion (pounds sterling 649 million) to Apple for patent infringements, which could also hit Samsung in the final quarter of the year. A decision on the case is due in December.

Sony suffered an embarrassing blow today as it was forced to suspend sales of its Xperia tablet -- only a month after the personal computer was launched.

The firm said that the supposedly water-resistant tablet was susceptible to water damage after discovering it between the screen and the case. Sony put the problem down to a production flaw at the Chinese plant where it is manufactured and has not yet decided when it will resume sales.



Distributed by MCT Information Services



Source: (c) London Evening Standard


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