Samsung’s cash pile triples, but still no match for Apple’s $145B hoard

By , May 9, 2013

A model poses with Galaxy Note of Samsung Electronics during a local launch event for Samsung's mobile devices at the company's headquarters in Seoul

Much is being made of Samsung’s hoard of cash, estimated at $28.5 billion once the South Korean conglomerate’s debt is taken into consideration. At any rate, the Galaxy maker has watched its net cash almost triple in the past year, thanks to double-digit profits fueled by the rising sales of its mobile division which makes smartphones and tablets.

In just three years, mobile phones have grown to be 74 percent of Samsung’s profits, overshadowing sales of LCD TVs and memory chips. On other words, three out of every four dollars Samsung earns come from mobile devices.

However, Apple remains the industry’s most-profitable player, retaining a $145 billion cash pile while offering anxious investors a $100 billion stock buyback. Is Samsung destined to follow Apple’s footsteps, or repeat the errors of other Asian giants, such as Panasonic, drowning in debt?

According to the Wall Street Journal, Samsung reported a 42 percent jump in profit for the first quarter of 2013. In a year, the smartphone maker grossed almost $40 billion, or $28.5 billion when debt is subtracted.

By comparison, Apple kept its $145 billion in cash safe overseas, deciding to borrow a cool $100 billion to increase its stock buyback. It is the first time Apple incurred any debt in 20 years.

Samsung’s pile of cash puts the company behind the $64 billion amassed by China Mobile (which is likely to start selling the next iPhone this year), but ahead of Toyota Motor’s $27.5 billion, the report said Wednesday.

How did Samsung amass such a small fortune?

Although its stock price has almost tripled since 2008, the firm’s dividend has dropped for the past five years and has fallen five percent in 2012 from 15.8 percent in 2007.

Samsung cash pile (WSJ chart 001)

Likewise, as more and more effort has gone into competing against Apple’s iPhone, capital spending by Samsung on plants to produce chips and other widgets hasn’t grown since 2011, according to the report.

While Samsung would only tell the Journal that it will invest in “areas like facilities, R&D, and marketing that will help the company solidify or boost competitiveness,” some observers hope the company does not follow the path of Japan’s Sharp or Panasonic.

In March, Samsung paid around $106 million for a three percent stake in electronics maker Sharp. After falling on hard times due to declining demand for LCD TVs, Sharp reportedly landed a contract with Apple to produce screens for the iPad and the iPhone 5S. Meanwhile, Samsung is believed to have lost its contract with Apple to produce displays for iOS devices.

iPad 5 front panel (NowhereElse 002)
Purported front panel of a fifth-generation iPad with iPad mini-like design

While currently Samsung is enjoying success in the mobile phone arena, that could change – just ask Panasonic. Once a corporate giant, Panasonic was caught flat-footed amid a declining market for TV sets.

The Japanese giant’s greatest sin: it bet heavily that plasma TVs would be hot sellers, pumping billions into factories. The company has lost more than $15 billion, its stock now listed as “junk,” according to the newspaper.

It’s an old story of how today’s technology dreams can quickly become tomorrow’s nightmare.

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  • http://www.facebook.com/dana.goldeneye Dana Mohammed

    by two or three years we will see that Samsung will dominate the market if apple continues its policy of closeness i mean comeon we are in 2013 and untill now you cannot place a darn widget in your pricey iphone 5 and yet you can do stuff like that in a cheap android. apple must start from ground-up. how hard it could be if apple made its IOS and Mac OS an open platform. but i stiill love apple products and loyalty keeps me in apples side otherwise speaking of software and hardware simply its OUTDATED

    • http://twitter.com/NerFTed Jason Duong

      Did your brain just fart?

      • No

        Are you shitting me? If Apple keeps going down the path of bring absolutely worthless and non-impressive features to their OS while keeping the look of it the exact same as it was in 2009, they will quickly begin to fade because people will realize this isn’t creative, or as Apple fanboys like to call it “innovative”. If they keep that up as Samsung continues to bring some actually innovative features to their phone, Samsung would quickly take over.

        EDIT: It’s also not like iOS is open source if you are trying to get at that. The only people who even make iOS unique at all is the jailbreaking community, and with Apple continuously making it harder for developers to find exploits, it will continue to take even longer to find a exploit than it did for the iPhone 5. I can easily see the next iPhone 5S/6 taking even long to jailbreak, and then what? You have your boring, stock iOS.

    • marcus1324

      I totally agree with you. Apple stocks are dropping and they definitely need to change iOS so you have more ‘root access.’ Apple wants there products to universally look the same as everything else where as android you can customize almost everything.

    • http://twitter.com/aidanharris1 ✪ aidan harris ✪

      Dashboard X?

  • http://twitter.com/digitalfeind Dani Hayes

    idownloadblog: iPhone, iPad, iOS, and now Samsung.

  • http://www.facebook.com/Makavelli.1 Joseph A. Ahmad

    Let’s not make senseless predictions without even seeing what iOS 7 contains. Let’s have a little more sense than that.

  • http://www.facebook.com/tafk1 Taf Khan

    Samsung needs to invest its profits in hiring Product designers. I don’t they they have any working with the mobile segment, I guess that’s why they keep copying Apple.

    • Carlos Franklin

      Copying Apple? Seriously!!!!

    • NonAppleholic

      If Samsung was really copying Apple, they’d never have blown their doors off the last Three Years. Growing at a faster rate than the so called only, one that’s being copied. Which juries and courts all over the have decided that Samsung is no more the Copyist than Apple! ….which has always been ‘Shameless about stealing Great Ideas’!!! ;-P

      But….. every thief in the World always goes out of their way to accuse others as being the thieves. Yet… they themselves are most likely the BIGGEST THIEF of Them All!

  • NonAppleholic

    Wow is this ever way off the beaten track. The writer mentions Samsung’s Conglomerate as a whole as if that’s the only cash they have. Not to mention the fact that even if it is only for their only Publicly Held (actually limited public ownership). Plus this very big difference between Apple and Samsung; Apple is completely dependent on their parts suppliers own investments in their production processes yields. A fire like at a memory maker in China forces them to buy parts from Samsung at higher prices. Problems at LG or Sharp force them to pay higher prices at Samsung…..

    And that’s the rub of being a totally out sourced device maker no different than HP, Dell, Cisco, Microsoft and Google now. They all depend on parts suppliers they have no control of. Whereas Samsung is near the only end to end manufacturer that depends on continually re-investing in their future through CAPeX and actual R&D spending that dwarfs Apple’s and every other totally out sourced device maker!!!

  • NonAppleholic

    I would like to point out to this writer and every deluded writer that seems to think Apple can even come close to comparing to Samsung Chaebol as a whole. They are like the Saudi Royals and Apple is better compared to every other totally outsourced American based company, who only appears to be #1 in their field to tech writers and share holders! ….which has included Dell, HP, Microsoft, Cisco, Compaq, Gateway, Google, etc!

    The reality is we are letting our perceptions of quality and a company’s brand being even closer to reality than they really are or ever can be. Here’s the difference in a nut shell between these two companies….. one being totally Publicly Held and run by share holder’s wants and needs and the other being a group of mostly privately held companies and shares held by the family, who are actually competing by being truly innovative in an end to end REALITY of making and selling parts to itself, from the plastics (Cheil Industries) to the metals mined in their own mines (even here in the US), to fabricating their own chips and products, shipped in their own ships they build, fueled by the fuel they pump in their own Oil and Gas production, as well as marketed by their own World Class Marketing (Cheil Worldwide), Award Winning Distribution Network!

    Apple owns no factories and very few hard assets to invest in, in the first place as a Totally Out Sourced Device maker who pays out the nose for everything while hiding profits, rather than investing in their own future. Consequently the only thing they have to invest in, is a supposedly worth $145 Billion in Cash, that when it is actually called in, will be only worth around $85 Billion at the most and under the best circumstance. If you fools still think they even have that much cash now after going into debt now. Because it’s the bottom line that counts and that bottom line will be minus the debt they’ve now incurred

    Just like us common mortals…., who cash in our IRA’s prematurely, we will have to not only pay deferred capital gains taxes (because early withdrawal cancels that shelter’s benefits), but we will be paying substantial penalties, because face value is not real value at all. It’s only upon the set Long Term contract, that we can count that face value as being real and cashable.

    If Apple were to sell off those majority of Foreign Held Long Term Securities they’re invested in, they would be sold on a discounted value or worth determined by their value today. Which would mean heavy heavy heavily DISCOUNTED TERMS! …..ether way Apple’s so called cash pile is closer in value to around 60% of that, which they and every deluded fan or investor seems to think is REAL!!! …….and since they aren’t re-investing in their own future in both R&D and CAPeX even close to Samsung’s, the REALITY is that Apple is Owned by others along with all that Cash and No Future. Whereas Samsung’s is all owned by them and their own determination to always make better products and real people know this, since Apple now Dominates the 3 fastest growing smartphone markets in the World in China, India and USA with real people buying real products creating a market share 2nd to none!