Samsung Electronics, the flagship subsidiary of the Samsung Group and the world’s largest technology company by revenues since 2009, reported earnings for the September quarter and the results are staggering. Year-on-year profit rose 91 percent as the company brought home $5.9 billion in net profit on $47.6 billion in sales, a 26 percent increase.
Operating profit margin also climbed to 18.8 percent. Much of the spoils came from Galaxy devices, especially smartphones where Samsung in the third quarter reigned supreme, grabbing twice Apple’s market share. Apple yesterday reported $8.2 billion in net profit on $36 billion revenues.
While Samsung has a long way to go to match Apple’s profitability, it’s been growing at a faster clip: Apple’s net profit in the September quarter grew 25 percent versus 91 percent for Samsung. No matter how you look at it, Samsung Electronics, which has headquarters in Suwon, South Korea, is evidently on fire. Does it stand a shot at beating Apple on profitability down the road?
Samsung in a media release attributed its performance mainly to “increased sales of handheld phones and stronger demand for display panels”, with its mobile arm accounting for more than half of total revenue.
The company didn’t break down tablet and smartphone sales for competitive reasons. According to market research firms ABI Research and IDC, Samsung shipped about 57 million smartphones in the third quarter. That’s most smartphones anyone has ever shipped in a quarter.
Global handset and smartphone shipments in Q3 2012. Source: ABI Research.
Senior VP Robery Yi expects market competition to intensify but “we will do our best to sustain our earnings momentum throughout the fourth quarter by implementing strategies we have developed for our businesses”.
By the way, Samsung Electronics is now a Galaxy company much as Apple is an iPhone company: nearly two-thirds of profits came from its mobile division.
In addition to launching the third-generation Galaxy smartphone and benefiting from Apple’s delayed iPhone 5 launch, Samsung in August released a massive 5.55-inch Galaxy Note II phablet with a stylus thing. Samsung’s mobile chief Shin Jong-kyun expects to sell three million Note II units during the first three months of availability.
Also helping with profitability: increased shipments of OLED and LCD panels for tablets and smartphones. Apple used to predominantly buy mobile displays from Samsung, but amid an ongoing legal fight switched orders to rival LG Display. Apple is also sourcing panels from Sharp, with LG Display now a prime supplier of Retina panels.
The flagship Galaxy S III handset is likely the biggest growth generator for Samsung. It sold 20 million units in the first hundred days of availability. Samsung is looking to ship as much as 30 million units by year’s end.
Here’s a nice commercial touting the S III’s ability to share sexy clips.
The company is also rumored to build a brand new Google-branded Nexus tablet due for an October 29 announcement. If you’re interested, Google Senior VP of engineering Vic Gundotra posted vacation photos on Google+ taken with a Nexus 10 prototype.
The gizmo is apparently designed to one-up the iPad with a high-resolution ten-inch display with a 2,560-by-1,600 pixel resolution at 300 pixels per inch. The iPad with Retina display tops the 264 pixels per inch on a 9.7-inch Retina display with a 2,048-by-1,536 pixel resolution.
A leaked manual suggests that the Nexus 10 will differ in industrial design from the Nexus 7, which is built by Asus. Of interest: a Federal Communications Commission filing suggests a 3G variant of the current seven-inch Nexus tablet is coming soon.
Is Samsung on fire or what?