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Samsung selling '500 handsets a minute'

Jan 08 2013 07:52 Reuters
Samsung-Galaxy-S3-Siii

Samsung has sold more than 30 million flagship Galaxy S III smartphones in about five months, making it one of the fastest selling smartphones in the world. (Samsung electronics, AFP)

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Seoul - Samsung Electronics, the world leader in mobiles and memory chips, said it likely earned a quarterly profit of $8.3bn, as it sold close to 500 handsets a minute and as demand picked up for the flat screens it makes for mobile devices, including those for rival Apple products.

That run of five straight record quarters may end in January-March on weaker seasonal demand, though a strong pipeline of smartphones - the South Korean group's biggest earner - and improving chip prices have eased concerns that earnings growth could slow this year, powering Samsung shares to record levels last week.

The stock dipped 1.1% on Tuesday, in a Seoul market that was down 0.4%.

"Investors are a bit concerned that Samsung's momentum may slow in the first half. The smartphone market is unlikely to sustain its strong growth as advanced markets are nearing saturation despite growth in emerging countries," said Kim Sung-soo, a fund manager at LS Asset Management.

Samsung has outpaced Apple - its biggest rival and biggest customer - despite the US firm's launch of the latest iPhone 5, with sales momentum boosted by its Galaxy Note II phone-cum-tablet, or 'phablet', in the fourth quarter. IPhone 5 sales were a little below expectations, analysts said.

While Apple rolled out just a single new smartphone last year globally, Samsung bombarded the market with 37 variants tweaked for regional and consumer tastes, from high-end smartphones to cheaper low-end models. By comparison, Taiwan's HTC Corp released 18 models, Nokia 9 and LG Electronics 24.

HTC on Monday said its fourth-quarter profit slumped more than 90% as its sales continue to trail those of the Galaxy range and the iPhone.

Samsung, valued at close to $230bn, gave its October-December earnings guidance on Tuesday, ahead of the full earnings release expected by January 25.

A high note

Shipments of Samsung's flagship Galaxy S III, which overtook the iPhone 4S in the third quarter to become the world's best-selling smartphone, are likely to have slipped to around 15 million in the last quarter from 18 million in July-September, analysts estimate, but sales of around 8 million Galaxy Note II 'phablets' should more than make up for that - pushing overall smartphone shipments to around 63 million.

"The Note was selling well, boosting fourth-quarter profit, while iPhone 5 sales were less than expected," said Song Myung-sub, an analyst at HI Investment & Securities.

"Samsung's profit will drop in the current quarter because of decreased phone profits. It will launch the Galaxy S IV only in March or April so, without new models, phone sales prices will fall this quarter. For the whole year, Samsung will launch new models faster than Apple and have the upper hand in the smartphone market."

The new Galaxy, widely expected to be released within months, may have an unbreakable screen and full high-definition quality resolution boasting 440 pixels per inch, as well as a better camera and a more powerful processor.

"Samsung's smartphone shipments are likely to grow even in a seasonally weak first quarter. The early launch of the Galaxy S IV would drive second-quarter growth momentum," said BNP Paribas Securities analyst Peter Yu, who predicts Samsung's 2013 operating profit will grow 25% to almost $35bn.

Samsung is expected to increase its smartphone sales by more than a third this year, and widen its lead over Apple as it offers a broader range of mobile devices, said Neil Mawston, executive director at market researcher Strategy Analytics, which forecasts Samsung will sell 290 million smartphones this year, up from a projected 215 million in 2012. Apple is expected to push up iPhone sales to 180 million from last year's 135 million, Mawston told Reuters last week,

Kim Sung-in, an analyst at Kiwoom Securities, sees Samsung shipping 320 million smartphones this year and doubling sales of its tablets to 32 million.

Strong numbers

Samsung said its October-December operating profit jumped 89% to 8.8 trillion won from a year ago, just ahead of a forecast for 8.7 trillion won by 16 analysts surveyed by Reuters. That is 8.6% higher than its previous record of 8.1 trillion won in July-September.

Analysts expect profits from the mobile division to more than double from last year and increase slightly from the previous quarter, to around 5.8 trillion won. A recovery in chip prices and flat screens should also boost component earnings, helped by booming sales of mobiles carrying Samsung's chips, micro-processors and flat screens.

Reflecting the strong outlook, shares in Asia's most valuable technology stock last week hit a life high of 1.584 million won ($1 500). The stock gained 44% last year, topping Apple's 31% increase and easily outpacing a 9% rise on the broader Korean market.

Samsung, led by founding family member and chairman Lee Kun-hee, is embroiled in a patent legal battle with Apple globally. Apple won a $1.05bn verdict against Samsung in August, but has failed to win a permanent sales ban on several, mostly older Samsung models.



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