Samsung handset sales surge, profits shrink in the third quarter

Posted:
in iPhone edited January 2014
South Korean electronics maker Samsung on Friday posted record mobile phone sales and profits for the third quarter of 2011, but the growth wasn't enough to overcome a drop in profit from other segments of the company.



Operating profit for Samsung's handset unit hit a record high of 2.52 trillion won ($2.3 billion) in the October quarter. That accounted for almost 60 percent of the company's total profits of 4.25 trillion won ($3.85 billion).



Samsung's chip business fell to 1.59 trillion won ($1.44 billion), down from 3.42 trillion won ($3.10 billion) in the third quarter of last year. The company's display unit posted losses again due to slumped demand for flat panel TVs.



Though the consumer electronics giant's performance was largely in line with its guidance, it saw a more than 13 percent drop in profit from the same period last year. Samsung's profit did improve sequentially, though, up from last quarter's 3.8 trillion won ($3.44 billion)figure.



Samsung has stopped breaking out unit sales in its earnings reports, but estimates from research group Strategy Analytics late Friday pegged the company's quarterly mobile phone shipments at 88 million for the third quarter. Of those devices, 27.8 million were presumed to be smartphones.



A substantial jump in smartphone sales year over year was enough to push Samsung past rival Apple to become the world's largest smartphone vender in the September quarter. Apple had claimed the top spot from Nokia in July, but was unable to hold onto it because of a cool down on iPhone 4 sales ahead of the iPhone 4S launch.



For its part, Apple asserts that the rise of Samsung's smartphone business has come, in part, because it copied designs and inventions from the iPhone. The two are locked in a fierce legal disagreement that includes more than 20 complaints across 10 countries.



At least with respect to the Galaxy Tab, Apple appears to have gained the upper hand against Samsung, winning injunctions in Australia and Germany.







So far, Samsung has been unsuccessful in its efforts to block sales of Apple's new iPhone 4S. The company has filed complaints in Italy, France, Australia and Japan.



The argument is further complicated by the fact that Samsung serves as both a supplier and a rival to Apple. Given that the iPhone maker is expected to be Samsung's largest customer this year, Apple's fight with its rival could affect the Korean company's bottom line. Numerous reports (1, 2) have suggested that Apple may be looking to move its component orders away from Samsung, possibly in response to the alleged infringement.
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Comments

  • Reply 1 of 30
    I still can't see how people don't think Samsung is straight-up copying Apple in almost every way when it comes to their consumer electronics. Even their accessories look the same! From the case to the keyboard dock to the 30-pin connector to the charging brick to the....... it goes on and on.
  • Reply 2 of 30
    jragostajragosta Posts: 10,473member
    Geez. Another misleading AI headline:



    "Samsung handset sales surge, profits shrink in the third quarter"



    This suggests that handset profits shrunk in the quarter - which is not true.
  • Reply 3 of 30
    Now here is evidence of Apples claim, they are being harmed in the marketplace. It's obvious that the "surge" can be attributed to duped customers (tic)
  • Reply 4 of 30
    Samsung = Samesung
  • Reply 5 of 30
    conradjoeconradjoe Posts: 1,887member
    Quote:
    Originally Posted by AppleInsider View Post


    South Korean electronics maker Samsung on Friday posted record mobile phone sales and profits for the third quarter of 2011, but the growth wasn't enough to overcome a drop in profit from other segments of the company.




    Looks like Samsung is a great company to buy a Phone from, but that is less desirable to own Samsung stock. It seems that Samsung's other products are dragging it down.



    Given that I may be buying a new Superphone soon, I like to know about their stellar sales. Given that I am little interested in investing in volatile CE stocks, I have little interest in their profits from TV sales.
  • Reply 6 of 30
    blastdoorblastdoor Posts: 1,894member
    A few thoughts:



    1. It's plain now why Samsung is willing to risk losing apple as a customer. They clearly make more profit from their own phones than selling chips to Apple.



    2. Samsung's smartphone sales are a good proxy for the strength of the overall market in the third quarter. It looks like the market is very strong.



    3. The fact that the third quarter was a "transition" quarter for Apple (and arguably the second quarter might have had some early transition aspects to it, though it's hard to know), combined with the strength in demand for smartphones as seen from Samsung's sales, makes me think that Apple is going to sell a huge number of iPhones in the fourth calendar quarter -- maybe over 40 million.



    4. While the cat may be out of the bag on Android phones, the cat is still solidly in the bag on tablets. In hindsight, Apple probably regrets not being more aggressive in the first two years with the iPhone (although admittedly there might not be much more that they could have done). But I'm expecting a continued onslaught from Apple against Android tablets, both in the market and in the courtroom. I think Apple is going to do whatever it takes to beat Android tablets.
  • Reply 7 of 30
    tbelltbell Posts: 3,146member
    It is not clear Samsung made more from phone sales then it makes from components sales. Apple has reduced purchases from Samsung in areas like chips, and LCDs. That is where Samsung is hurting. The hurt could be from Apple reducing orders. Samsung's phone sales are up, but the over all profit is down. You really need to know how much the value of the business Apple took away from Samsung, and how many of the phones Samsung sold that Apple is pissed off about. We don't' have those numbers. Interestingly enough Samsung didn't tell us how many phones it sold, when it normally does. I suspect the reason is it doesn't want to make it easy for Apple to claim damages.





    Moreover, what could Apple do to be more aggressive? Apple was tied into a long term contract with AT&T. Sprint, Verizon, and T-Mobile all have loyal customers who aren't switching carriers for a phone. Apple gave birth to Android not by giving Google something to copy from, but by making carriers like Verizon, Sprint, and T-Mobile so desperate for a solution to the iPhone onslaught that they embraced policies they wouldn't have before Apple came along and changed the landscape. Unfortunately to change the landscape, Apple had to agree to the AT&T tie in, which allowed Android time to be entrenched on those other carriers.



    Quote:
    Originally Posted by Blastdoor View Post


    A few thoughts:



    1. It's plain now why Samsung is willing to risk losing apple as a customer. They clearly make more profit from their own phones than selling chips to Apple.



    2. Samsung's smartphone sales are a good proxy for the strength of the overall market in the third quarter. It looks like the market is very strong.



    3. The fact that the third quarter was a "transition" quarter for Apple (and arguably the second quarter might have had some early transition aspects to it, though it's hard to know), combined with the strength in demand for smartphones as seen from Samsung's sales, makes me think that Apple is going to sell a huge number of iPhones in the fourth calendar quarter -- maybe over 40 million.



    4. While the cat may be out of the bag on Android phones, the cat is still solidly in the bag on tablets. In hindsight, Apple probably regrets not being more aggressive in the first two years with the iPhone (although admittedly there might not be much more that they could have done). But I'm expecting a continued onslaught from Apple against Android tablets, both in the market and in the courtroom. I think Apple is going to do whatever it takes to beat Android tablets.



  • Reply 8 of 30
    macrulezmacrulez Posts: 2,455member
    deleted
  • Reply 9 of 30
    macrulezmacrulez Posts: 2,455member
    deleted
  • Reply 10 of 30
    Moved my comment to the other thread...
  • Reply 11 of 30
    Okay, Samsung wins. I own an iPhone. More jackasses in some European country own Samsungs with monochrome screens and MIDI ringtones than own iPhones in the US and A.



    Why do I care again?
  • Reply 12 of 30
    nagrommenagromme Posts: 2,834member
    Quote:
    Originally Posted by MacRulez View Post


    It's going to be difficult to demonstrate that any significant number of customers are looking at a box that has "SAMSUNG" in 72-point type on the front and misread that as "Apple".



    But not so difficult to show that confusion in a salesperson’s hands—or the hands of friends/consumers seen using them! Or for people who know WHAT they want, but aren’t tech-savvy enough to know that Apple makes it and Samsung makes something that intentionally merely looks almost exactly the same.



    It doesn’t have to confuse MOST people to be a problem for Apple. Just some.



    And it’s a problem for we consumers that Samsung isn’t bringing innovation to the market when they mimic Apple so closely. Wouldn’t we rather see what they could come up with on their own?
  • Reply 13 of 30
    Quote:
    Originally Posted by macinthe408 View Post


    Okay, Samsung wins. I own an iPhone. More jackasses in some European country own Samsungs with monochrome screens and MIDI ringtones than own iPhones in the US and A.



    Why do I care again?



    Because you somehow relate Apple's well being with your own. Stop being a fanboy.
  • Reply 14 of 30
    Quote:
    Originally Posted by LogicNReason View Post


    Because you somehow relate Apple's well being with your own. Stop being a fanboy.



    *looks at username* *puts on glasses and relaxes*



    Also, I like your sig.
  • Reply 15 of 30
    Quote:
    Originally Posted by nagromme View Post


    But not so difficult to show that confusion in a salesperson?s hands?or the hands of friends/consumers seen using them! Or for people who know WHAT they want, but aren?t tech-savvy enough to know that Apple makes it and Samsung makes something that intentionally merely looks almost exactly the same.



    It doesn?t have to confuse MOST people to be a problem for Apple. Just some.



    And it?s a problem for we consumers that Samsung isn?t bringing innovation to the market when they mimic Apple so closely. Wouldn?t we rather see what they could come up with on their own?





    Because when Apple adds notifications, it's 'innovative'.
  • Reply 16 of 30
    AI, for the n-th time, Shipments ≠ Sales! Samsung reports shipments. Period.

  • Reply 17 of 30
    Quote:
    Originally Posted by anantksundaram View Post


    AI, for the n-th time, Shipments ≠ Sales! Samsung reports shipments. Period.





    Just like SONY counts shipments and not sales like Nintendo and Micorsoft.
  • Reply 18 of 30
    Quote:
    Originally Posted by ConradJoe View Post


    Looks like Samsung is a great company to buy a Phone from, but that is less desirable to own Samsung stock. It seems that Samsung's other products are dragging it down.



    Given that I may be buying a new Superphone soon, I like to know about their stellar sales. Given that I am little interested in investing in volatile CE stocks, I have little interest in their profits from TV sales.



    Samsung's overall sales went from $42B to $45 Q2Q, I don't think that's a bad sign. They are still struggling in part/component business (but those areas are very competitive - capital-intensive, low-margin and cyclical), but their telecomm sales/profit is up almost 20%. Their appliance sales (TV) hasn't changed much (less profit).



    Not sure why you are so concerned about Samsung's stock prices - they've been making mobile devices at least a decade longer than Apple.



    Q3 2011

    Digital Media & Appliances : $14.36B $0.25

    Telecomm (smartphone) : $14.9B $2.52

    Total: $29.26



    Parts:

    Display Panel Business : $7B $0.05

    Semiconductor : $9B $1.59

    Total: $16.48





    Q2 2011

    Digital Media & Appliances : $14B - $500M profit

    Telecomm (smartphone) : $12B - $1.6B profit

    Total = $26B



    Part/Component busines:

    Display Panel Business: $7B - ($200M) loss

    Semiconductor: $9B - $1.8B profit

    Total = $16B
  • Reply 19 of 30
    If they shipped ~20M phones in Q3 and we assume the Quarter over Quarter gain was 37%, then that means they sold/shipped 27.4M phones, hmmm very close to Strategy Analytics estimates. If the number from Q42010 is 10M phones, http://www.readwriteweb.com/archives...utsell_pcs.php, then 37% year over year that SAMSUNG said, then increase is 13.7M phones in Q42011.



    I am presuming the earning scale with number of phones. In any case, if 10M=> 13.7M is what I think Samsung said they achieved, not too shabby, but a drop in Q32011 to Q42011 of 30%, without the excuse of an equivalent iPhone 4S roll out.



    I think the Q3 to Q4 drop was industry-wide that kind of makes me think I got it right, but ... I may have the data wrong. At least you know how I did the numbers.
  • Reply 20 of 30
    ?Samsung has come out with products that appeal to all the different form factors and specifications out there,? said T.Z. Wong, a Beijing-based analyst at researcher IDC. ?That is a strategy they have executed very well.?



    Apple's iPhone has appeal, but people want different form factors and physical keyboards. If you're trying to keep market share, it seems obvious that Apple should add some new product forms with the same underlying hardware and software.
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