South Korean electronics company Samsung sees strong sales of its smartphones, but not enough to overtake Nokia
Samsung does not seem to have overhauled Nokia as the world's largest seller of mobile phones, but the company saw strong sales of its smartphones in its just-reported quarter, despite a fall in its operating profit.
The South Korean company reported a 3.75 trillion won ($3.6bn) operating profit for the quarter from April to June, narrowly beating analyst forecasts. That was down 18% from 5.01tn won a year ago, as the company's flat screen unit reported a second quarter of losses and its mainstay chip business struggled.
The technology conglomerate joins a host of global companies in warning that fragile consumer demand is hurting sales of TVs, flat screens, computers and semiconductors.
"Samsung's earnings momentum will revive in Q3, but the recovery will not be strong because of weak economies in the US and Europe," said Lee Dong-Jin, fund manager at KTB Asset Management. "There are also no new IT applications that can drive demand as Apple's iPhone and iPad did."
Operating profit from its telecoms division more than doubled to 1.67tn won, from 630bn won a year ago, helped by strong sales of a new version of its flagship smartphone Galaxy S, of which 5m have so far been sold.
Samsung did not provide sales numbers for its handsets, but said shipments rose by a high single-digit percentage from the previous quarter's 70m units. That would put it at a maximum of about 77m units, behind the struggling Finnish company Nokia, which sold 88.5m handsets in the second quarter.
But analysts still think that it could have overtaken both Nokia and Apple in the smartphone field – Apple shipped just over 20m iPhones in the same period. Full figures from analysts are expected later in July.
Samsung is locked in a battle with Apple in the US over the appearance of some of its smartphones and tablets, which Apple says breaches "trade dress" rules to make them look too similar to its iPhone and iPad.
Falling chip prices are the biggest concern for the South Korean company, as it earned half of its profit from semiconductors in the second quarter. Its display business reported a second consecutive quarterly operating loss of 210bn won, little changed from 230bn won loss in the previous quarter.
On Thursday, Sony and Panasonic also warned of weak TV sales, especially in the US and Europe, following Philips and Corning in highlighting anemic demand.
Samsung is betting big on its mobile phone business as it rolls out new versions of tablets and phones, helping it capture market share from BlackBerry maker RIM and Nokia .
Samsung's shares, which hit a record high in late January, have lost 12% so far this year.
The company boasts a market capitalisation of $134bn (£82bn), bigger than the combined value of rivals Sony, Nokia, Toshiba, Panasonic and LG Display.
"It will be difficult to boost earnings sharply in the third quarter as demand for memory chips and TVs will continue to remain depressed," said Song Myung-sup, an analyst at HI Investment & Securities. "Its loss-making flat-screen business will also report break even at best."
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Source: http://www.guardian.co.uk/technology/2011/jul/29/samsung-profits-down-smartphone-sales-up
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