Samsung profits driven by iPhone XS components, smartphone earnings plummeting

AppleInsider

Samsung advises it will be reporting record operating profits in its upcoming quarterly results, but while seemingly a return to form for the South Korean giant, its earnings boost is partly due to supplying Apple OLED displays for the iPhone XS range.

Earnings guidance from Samsung Electronics released on Friday advise the company made a consolidated operating profit of approximately 17.5 trillion won ($15.5 billion) from consolidated sales of 65 trillion won ($57.6 billion) in the third quarter, making it Samsung's highest quarterly earnings on record. A full breakdown of the results has yet to be released, but is expected by the end of October.

Despite the lack of detail from Samsung, analysts advised CNN the year-on-year operating profit increase of approximately 20 percent is probably due to Samsung's stronger sales in its components business. SK Kim of Daiwa Capital Markets believes the high sales of memory chips, as well as higher earnings in Samsung's display business will have contributed significantly to the figure.

As the main supplier of OLED panels to Apple for its iPhone XS and iPhone XS Max, alongside LG Display, Kim suggests the high margins for the components certainly helped with revenue. Apple is thought to account for 25 to 30 percent of sales for Samsung's display business, with the unit estimated to have generated approximately 10 percent of Samsung's overall 54 trillion won ($48 billion) profit for last year.

While memory sales are said to have helped Samsung achieve record profits over the last year, there is some concern about slowing demand for memory chips, as well as a subsequent price reduction for the components. Analysts have warned about a potential downturn for memory, but it seemingly has yet to impact Samsung's revenue streams.

Once a major revenue source for Samsung, the company's smartphone arm is expected to report disappointing smartphone sales in the third quarter. Canalys analyst TuanAnh Nguyen suggests Samsung is suffering a "slowdown in many markets" for its mobile devices compared to last year, despite recently launching the flagship Galaxy Note 9.

Over the summer, Samsung revealed a 22-percent drop in its mobile revenues, despite shipping 83 percent more smartphones in the second quarter. While Samsung shipped 71.5 million units in Q2 2018 compared to Apple's 41.3 million iPhones, Samsung reported it had earned less than half the revenue of iPhone sales during the period.

While its smartphone business is thought to be dragging down revenue, an unexpected source has apparently helped prop up revenue. Analyst Kim believes a hot South Korean summer helped increase sales of air conditioning units from Samsung's consumer electronics division.

bigbillygoatgruff

AppleInsider said:
While Samsung shipped 71.5 million units in Q2 2018 compared to Apple's 41.3 million iPhones, Samsung reported it had earned less than half the revenue of iPhone sales during the period.

This is really astonishing.  It's still a lot of revenue, but I wonder how smart of a business decision it really is.  The R&D overhead they are carrying for having so many models must be killing them.

anantksundaram

Samsung has peaked. Fewer leaks under Cook appears to have killed their R&D.

gmgravytrain

All the smartphone reviewers say Samsung flagship smartphones are much better than Apple's iPhones. Samsung smartphones are said to have far more features at a much cheaper cost. Also, Samsung has a better selection of smartphones to choose from. At least that's what 99% of Youtubers have to say about Samsung smartphones. This year, the iPhone is suffering from Beautygate, Chargegate and Connectivitygate. Not even one Android flagship smartphone seems to have any problems at all or they're not being reported on the internet as such. There's the omnipresent complaint about iPhones not coming with fast chargers in the box despite their exorbitant price. No freaking headphone jack and the ugly display notch just about completes the reasons why iPhones are said to be inferior to all the Samsung offerings.

This year the iPhone is said to be TOO expensive for the consumer masses and supposedly no one is going to buy iPhones because they all believe Apple is just ripping-off consumers. So, with all that being said, I'm surprised Samsung smartphone sales are falling off. It just runs counter to what all the reviewers are saying. Apple's iPhone should clearly be losing the battle. Heck, Samsung is beating the pants off of Apple in terms total smartphone shipments. Apple appears to be doomed this year. Smartphone reviewers are never wrong.

/s

Same old, same old.  Only iPhones seem to have problems and that's just downright unlikely.

bigbillygoatgruff

gmgravytrain said:

All the smartphone reviewers say Samsung flagship smartphones are much better than Apple's iPhones. Samsung smartphones are said to have far more features at a much cheaper cost. Also, Samsung has a better selection of smartphones to choose from. At least that's what 99% of Youtubers have to say about Samsung smartphones. This year, the iPhone is suffering from Beautygate, Chargegate and Connectivitygate. Not even one Android flagship smartphone seems to have any problems at all or they're not being reported on the internet as such. There's the omnipresent complaint about iPhones not coming with fast chargers in the box despite their exorbitant price. No freaking headphone jack and the ugly display notch just about completes the reasons why iPhones are said to be inferior to all the Samsung offerings.

This year the iPhone is said to be TOO expensive for the consumer masses and supposedly no one is going to buy iPhones because they all believe Apple is just ripping-off consumers. So, with all that being said, I'm surprised Samsung smartphone sales are falling off. It just runs counter to what all the reviewers are saying. Apple's iPhone should clearly be losing the battle. Heck, Samsung is beating the pants off of Apple in terms total smartphone shipments. Apple appears to be doomed this year. Smartphone reviewers are never wrong.

/s

Same old, same old.  Only iPhones seem to have problems and that's just downright unlikely.

Only one of those companies was forced to recall or brick every single unit of its flagship phone model for being an incendiary device.  And they call us sheeple...

lkrupp

bigbillygoatgruff said:

gmgravytrain said:

All the smartphone reviewers say Samsung flagship smartphones are much better than Apple's iPhones. Samsung smartphones are said to have far more features at a much cheaper cost. Also, Samsung has a better selection of smartphones to choose from. At least that's what 99% of Youtubers have to say about Samsung smartphones. This year, the iPhone is suffering from Beautygate, Chargegate and Connectivitygate. Not even one Android flagship smartphone seems to have any problems at all or they're not being reported on the internet as such. There's the omnipresent complaint about iPhones not coming with fast chargers in the box despite their exorbitant price. No freaking headphone jack and the ugly display notch just about completes the reasons why iPhones are said to be inferior to all the Samsung offerings.

This year the iPhone is said to be TOO expensive for the consumer masses and supposedly no one is going to buy iPhones because they all believe Apple is just ripping-off consumers. So, with all that being said, I'm surprised Samsung smartphone sales are falling off. It just runs counter to what all the reviewers are saying. Apple's iPhone should clearly be losing the battle. Heck, Samsung is beating the pants off of Apple in terms total smartphone shipments. Apple appears to be doomed this year. Smartphone reviewers are never wrong.

/s

Same old, same old.  Only iPhones seem to have problems and that's just downright unlikely.

Only one of those companies was forced to recall or brick every single unit of its flagship phone model for being an incendiary device.  And they call us sheeple...

As for the sheeple and lemmings label I’ve wondered what that’s supposed to mean. If it means going along with the crowd that would aptly describe what the Windows and Android users are all about. If you buy Android or Windows you are following 80% of the world, but that does't make you a lemming? Really?

davidw

bigbillygoatgruff said:

AppleInsider said:
While Samsung shipped 71.5 million units in Q2 2018 compared to Apple's 41.3 million iPhones, Samsung reported it had earned less than half the revenue of iPhone sales during the period.

This is really astonishing.  It's still a lot of revenue, but I wonder how smart of a business decision it really is.  The R&D overhead they are carrying for having so many models must be killing them.

I don't think its the R&D that Samsung spends of low end phones that is killing them on the low end, it's the amount of money that they spend on advertising, for their high end phones, that is doing them in on the high end.

Once a user is using a high end phone, there's more customer loyalty and they don't switch brand too often. But it's frequently reported that there are more Android phone users switching to iPhones than vice versa. And this mainly occurs with low end Android phone users. My thinking is that a lot users that got their low end Android phone nearly for free or for only a couple of hundred bucks, will tolerate Android. But when it comes to paying over $500 for a high end phone, they might think twice about buying a high end phone with Android.

This is where Samsung is failing. The user experience from owning a low end Samsung phone with Android, is not enough to ensure that users will automatically want a high end Samsung phone with Android, when it comes time for them to buy a high end phone. Samsung is not building enough customer loyalty with their low end phones users.  Which happens to be most of their phone sales and the least profitable ones at that.  Samsung sacrifices a lot of their profits on their low end phones, with the hope that their low end phone users will eventually upgrade to a Samsung high end phone. But many end up upgrading to an iPhone. And it might be as much Android fault as Samsung's. I'm sure Google still makes more ad revenue from iPhone users, than high end Android phone users, so it's not a big deal to Google whose high end phones these users are upgrading to. Low end Android phone users will probably still be using a lot of Google this and Google that, when they switch to an iPhone. 

Android would easily earn Krusty (the Clown) brand seal of approval ......... "It's not just good, it's good enough". 

https://nathanarnold.wordpress.com/2009/02/02/its-not-just-good-its-good-enough/

k2kw

I heard a rumor that the camera in XS is made by Samsung.  Anyone know.

dasanman69

gmgravytrain said:

All the smartphone reviewers say Samsung flagship smartphones are much better than Apple's iPhones. Samsung smartphones are said to have far more features at a much cheaper cost. Also, Samsung has a better selection of smartphones to choose from. At least that's what 99% of Youtubers have to say about Samsung smartphones. This year, the iPhone is suffering from Beautygate, Chargegate and Connectivitygate. Not even one Android flagship smartphone seems to have any problems at all or they're not being reported on the internet as such. There's the omnipresent complaint about iPhones not coming with fast chargers in the box despite their exorbitant price. No freaking headphone jack and the ugly display notch just about completes the reasons why iPhones are said to be inferior to all the Samsung offerings.

This year the iPhone is said to be TOO expensive for the consumer masses and supposedly no one is going to buy iPhones because they all believe Apple is just ripping-off consumers. So, with all that being said, I'm surprised Samsung smartphone sales are falling off. It just runs counter to what all the reviewers are saying. Apple's iPhone should clearly be losing the battle. Heck, Samsung is beating the pants off of Apple in terms total smartphone shipments. Apple appears to be doomed this year. Smartphone reviewers are never wrong.

/s

Same old, same old.  Only iPhones seem to have problems and that's just downright unlikely.

Only iPhones? Did you forget about the exploding Samsung Note debacle? 

dasanman69

lkrupp said:

bigbillygoatgruff said:

gmgravytrain said:

All the smartphone reviewers say Samsung flagship smartphones are much better than Apple's iPhones. Samsung smartphones are said to have far more features at a much cheaper cost. Also, Samsung has a better selection of smartphones to choose from. At least that's what 99% of Youtubers have to say about Samsung smartphones. This year, the iPhone is suffering from Beautygate, Chargegate and Connectivitygate. Not even one Android flagship smartphone seems to have any problems at all or they're not being reported on the internet as such. There's the omnipresent complaint about iPhones not coming with fast chargers in the box despite their exorbitant price. No freaking headphone jack and the ugly display notch just about completes the reasons why iPhones are said to be inferior to all the Samsung offerings.

This year the iPhone is said to be TOO expensive for the consumer masses and supposedly no one is going to buy iPhones because they all believe Apple is just ripping-off consumers. So, with all that being said, I'm surprised Samsung smartphone sales are falling off. It just runs counter to what all the reviewers are saying. Apple's iPhone should clearly be losing the battle. Heck, Samsung is beating the pants off of Apple in terms total smartphone shipments. Apple appears to be doomed this year. Smartphone reviewers are never wrong.

/s

Same old, same old.  Only iPhones seem to have problems and that's just downright unlikely.

Only one of those companies was forced to recall or brick every single unit of its flagship phone model for being an incendiary device.  And they call us sheeple...

As for the sheeple and lemmings label I’ve wondered what that’s supposed to mean. If it means going along with the crowd that would aptly describe what the Windows and Android users are all about. If you buy Android or Windows you are following 80% of the world, but that does't make you a lemming? Really?

It means the Android crowd isn't blind. How can anyone say that only iPhone issues get publicity when the Samsung Note problems were covered by every news outlet. 

Rayz2016

dasanman69 said:

lkrupp said:

bigbillygoatgruff said:

gmgravytrain said:

All the smartphone reviewers say Samsung flagship smartphones are much better than Apple's iPhones. Samsung smartphones are said to have far more features at a much cheaper cost. Also, Samsung has a better selection of smartphones to choose from. At least that's what 99% of Youtubers have to say about Samsung smartphones. This year, the iPhone is suffering from Beautygate, Chargegate and Connectivitygate. Not even one Android flagship smartphone seems to have any problems at all or they're not being reported on the internet as such. There's the omnipresent complaint about iPhones not coming with fast chargers in the box despite their exorbitant price. No freaking headphone jack and the ugly display notch just about completes the reasons why iPhones are said to be inferior to all the Samsung offerings.

This year the iPhone is said to be TOO expensive for the consumer masses and supposedly no one is going to buy iPhones because they all believe Apple is just ripping-off consumers. So, with all that being said, I'm surprised Samsung smartphone sales are falling off. It just runs counter to what all the reviewers are saying. Apple's iPhone should clearly be losing the battle. Heck, Samsung is beating the pants off of Apple in terms total smartphone shipments. Apple appears to be doomed this year. Smartphone reviewers are never wrong.

/s

Same old, same old.  Only iPhones seem to have problems and that's just downright unlikely.

Only one of those companies was forced to recall or brick every single unit of its flagship phone model for being an incendiary device.  And they call us sheeple...

As for the sheeple and lemmings label I’ve wondered what that’s supposed to mean. If it means going along with the crowd that would aptly describe what the Windows and Android users are all about. If you buy Android or Windows you are following 80% of the world, but that does't make you a lemming? Really?

It means the Android crowd isn't blind. How can anyone say that only iPhone issues get publicity when the Samsung Note problems were covered by every news outlet. 

Well, to be fair, the Samsung Notes were destroying houses and cars and were being banned from flights. It wasn’t so much news coverage as a global public alert warning. 

Rayz2016

Does it strike anyone else as odd that Samsung includes revenues from air-conditioning units as part of its consumer electronics division. Isn’t that an appliance?

Are refrigerators and washing machine in there too?

claire1

lkrupp said:

bigbillygoatgruff said:

gmgravytrain said:

All the smartphone reviewers say Samsung flagship smartphones are much better than Apple's iPhones. Samsung smartphones are said to have far more features at a much cheaper cost. Also, Samsung has a better selection of smartphones to choose from. At least that's what 99% of Youtubers have to say about Samsung smartphones. This year, the iPhone is suffering from Beautygate, Chargegate and Connectivitygate. Not even one Android flagship smartphone seems to have any problems at all or they're not being reported on the internet as such. There's the omnipresent complaint about iPhones not coming with fast chargers in the box despite their exorbitant price. No freaking headphone jack and the ugly display notch just about completes the reasons why iPhones are said to be inferior to all the Samsung offerings.

This year the iPhone is said to be TOO expensive for the consumer masses and supposedly no one is going to buy iPhones because they all believe Apple is just ripping-off consumers. So, with all that being said, I'm surprised Samsung smartphone sales are falling off. It just runs counter to what all the reviewers are saying. Apple's iPhone should clearly be losing the battle. Heck, Samsung is beating the pants off of Apple in terms total smartphone shipments. Apple appears to be doomed this year. Smartphone reviewers are never wrong.

/s

Same old, same old.  Only iPhones seem to have problems and that's just downright unlikely.

Only one of those companies was forced to recall or brick every single unit of its flagship phone model for being an incendiary device.  And they call us sheeple...

As for the sheeple and lemmings label I’ve wondered what that’s supposed to mean. If it means going along with the crowd that would aptly describe what the Windows and Android users are all about. If you buy Android or Windows you are following 80% of the world, but that does't make you a lemming? Really?

What makes the argument worse is Samsung alone will spend 14 billion on anti-Apple campaigns along with God only knows how much the other 1,300+ iKnockoff companies spend.

Apple spends about 1 billion on ALL marketing.

Do the math.

Who's the sheep? The people influenced by ads or those influenced by choice?


Even worse, android users tend to repeat what each other say. The internet and real world is filled with the same rumors and memes parroted by the android crowd. "Samsung makes the iPhone screen lol!", "Bendgate!", "Apple is for the sheeps!" etc. etc.
Meanwhile Apple users tend to be happy and not bother anyone.

dasanman69 said:

lkrupp said:

bigbillygoatgruff said:

gmgravytrain said:

All the smartphone reviewers say Samsung flagship smartphones are much better than Apple's iPhones. Samsung smartphones are said to have far more features at a much cheaper cost. Also, Samsung has a better selection of smartphones to choose from. At least that's what 99% of Youtubers have to say about Samsung smartphones. This year, the iPhone is suffering from Beautygate, Chargegate and Connectivitygate. Not even one Android flagship smartphone seems to have any problems at all or they're not being reported on the internet as such. There's the omnipresent complaint about iPhones not coming with fast chargers in the box despite their exorbitant price. No freaking headphone jack and the ugly display notch just about completes the reasons why iPhones are said to be inferior to all the Samsung offerings.

This year the iPhone is said to be TOO expensive for the consumer masses and supposedly no one is going to buy iPhones because they all believe Apple is just ripping-off consumers. So, with all that being said, I'm surprised Samsung smartphone sales are falling off. It just runs counter to what all the reviewers are saying. Apple's iPhone should clearly be losing the battle. Heck, Samsung is beating the pants off of Apple in terms total smartphone shipments. Apple appears to be doomed this year. Smartphone reviewers are never wrong.

/s

Same old, same old.  Only iPhones seem to have problems and that's just downright unlikely.

Only one of those companies was forced to recall or brick every single unit of its flagship phone model for being an incendiary device.  And they call us sheeple...

As for the sheeple and lemmings label I’ve wondered what that’s supposed to mean. If it means going along with the crowd that would aptly describe what the Windows and Android users are all about. If you buy Android or Windows you are following 80% of the world, but that does't make you a lemming? Really?

It means the Android crowd isn't blind. How can anyone say that only iPhone issues get publicity when the Samsung Note problems were covered by every news outlet. 

Here's another example of the parrot. Samsung iKnockoffs burned down planes, trains and automobiles and STILL couldn't get the coverage 14 bent iPhones got. The androids cried when Samsung got a single negative story.

Sorry dude the iKnockoffs will NEVER get the media coverage Apple gets. Craig Federighi could pick up the wrong iPhone at a keynote and its all over the internet for years... Oops this actually happened!

carnegie

Rayz2016 said:

Does it strike anyone else as odd that Samsung includes revenues from air-conditioning units as part of its consumer electronics division. Isn’t that an appliance?

Are refrigerators and washing machine in there too?

Yes, that’s where I’d expect appliances (such as refrigerators and washing machines) to be accounted for.

Samsung has four business divisions: Consumer Electronics (CE), Information Technology and Mobile Communications (IM), Device Solutions [DS), and Harman (which it acquired last year). CE includes things like TVs and refrigerators. IM includes things like smartphones and computers. DS includes things like memory and display panels.