Samsung suffered a 73.9% drop in Q3 mobile profits while Apple's rose 11.3 percent

Posted:
in AAPL Investors edited November 2014
Samsung Electronics reported overall Q3 operating profits of 4.06 trillion won ($3.8 billion)--a 60 percent year-over-year drop--while its Mobile division suffered a 73.9 percent drop in profits.

Samsung


Apple's overall operating profits for the quarter were $11.2 billion, up 11.3 percent over the year ago quarter. That means Samsung is now earning about one third of Apple's profits while still shipping over twice as many phones. Samsung is now earning about one third of Apple's profits while still shipping over twice as many phones

Samsung reported that while its overall sales were down 19.7 percent over the year ago quarter, its mobile revenues were down by 34 percent.

That's a critical problem for the company because most of its profits were coming from its IT & Mobile Communications (IM) group, which is roughly comparable to Apple's operations. Other divisions of Samsung Electronics include its CE group that sells TVs and appliances and its DS division that includes sales of display panels, semiconductors and memory components.

At the beginning of 2014, IM was contributing 70 percent of the company's profits, primarily from smartphone sales--specifically from sales of its higher end Galaxy S and Note devices.

Samsung notes a black hole in the Galaxy

The company's earnings release noted that within the IM group, "despite slight growth in shipments, earnings declined QoQ as ASP decreased due to weak smartphone product mix and sales decrease put pressure on the cost structure."

Samsung said its phone shipments in the quarter were "driven by mid to low-end products," adding that its Note 4 release only had "marginal increase" due to being released at the very end of the quarter.

Samsung stated that its tablet "shipments increased, led by expansion of new Tab S," but not enough to blunt the impact of low margin, middle tier phones. Samsung's tablet business is also not very profitable.

Looking forward to the winter quarter, the company said to "expect demand for smartphone and tablet to increase under year-end seasonality while competition among set makers to intensify."

Samsung also reported a 93.9 percent drop in profits from its display panel business, which it said was "due to weak OLED shipments despite strong LCD sales."

Samsung's lowest profits since 2011

Samsung profits down


A report by Korea JoongAng Daily noted that the quarter was the first where Samsung had earned less than 5 trillion won since Q3 2011.

Samsung's overall profit margin bottomed out at 8.72 percent, "which is the first time in three years that the ratio has fallen below the 10 percent mark," the paper stated.

The paper cited Lee Se-chul, an analyst at Woori Investment & Securities, as saying "Samsung's smartphone performance is declining, and as the market is entering a phase of maturity, it is not easy for the company to come up with products differentiated from others."

The report added, "analysts expect that the fourth quarter will not be a major improvement from the third quarter, with operating profits staying around the mid-4 trillion won range."
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Comments

  • Reply 1 of 140
    dimmokdimmok Posts: 359member
    Say it again...."Samsung is now earning about one third of Apple's profits while still shipping over twice as many phones"
  • Reply 2 of 140
    mpantonempantone Posts: 2,040member

    Oh my.

  • Reply 3 of 140
    "Samsung notes a black hole in the Galaxy"

    I loled.

    I can't wait to repeat that stat though, twice as many phones with 1/3 the profit.
  • Reply 4 of 140
    freerangefreerange Posts: 1,597member
    Couldn't happen to a nicer company than these masters of innovation! /s
  • Reply 5 of 140
    poochpooch Posts: 768member
    for those who would gloat ... apple will be in the same position one day. not if, but when. just sayin'.
  • Reply 6 of 140
    pooch wrote: »
    for those who would gloat ... apple will be in the same position one day. not if, but when. just sayin'.

    Not sure why you think that. Apple has the ability to innovate and replace their own products. It is not unreasonable to expect a future where the Watch has taken over from the iPhone.
  • Reply 7 of 140

    Maybe in 10 years this will be seen as the time when Samsung's backbiting Apple and trying to go for their business model bit them on the ass. Particularly if Apple tends to seek other vendors for silicon and parts, given Samsung's track record. Although they are a famously illegal company that has gotten away with a lot because of ties to South Korean government.

  • Reply 8 of 140
    bdkennedy1bdkennedy1 Posts: 1,459member

    When Apple revolutionizes battery technology (with Tesla), Samsung can say goodbye to their phone business.

  • Reply 9 of 140
    bdkennedy1 wrote: »
    When Apple revolutionizes battery technology (with Tesla), Samsung can say goodbye to their phone business.

    Introducing iPhone 7S, with two week battery life. And AppleWatch 3, with five day battery life.

    Great stuff. :D
  • Reply 10 of 140
    mpantonempantone Posts: 2,040member

    Samsung's Q4 will be worse. 

     

    Pre-orders for Apple's new iPhones outstripped existing Samsung Galaxy handsets.

  • Reply 11 of 140
    boredumbboredumb Posts: 1,418member
    Quote:

    Originally Posted by TheWhiteFalcon View Post

    Quote:

    Originally Posted by Pooch View Post

    for those who would gloat ... apple will be in the same position one day. not if, but when. just sayin'.


    Not sure why you think that. Apple has the ability to innovate and replace their own products. It is not unreasonable to expect a future where the Watch has taken over from the iPhone.

    He's saying it because nothing lasts forever, as marvelous as Apple's accomplishments are

    (and will continue to be, for however long).

     

    It isn't as though anyone's wishing for it.

    But you always chase the lead dog, and, sooner or later, a better dog comes along.  

    And, as industries go, this is an especially volatile one by nature.

    Let's just enjoy it and hope we have years and years to do so.

  • Reply 12 of 140
    pooch wrote: »
    for those who would gloat ... apple will be in the same position one day. not if, but when. just sayin'.

    True... all companies in every industry will experience it someday.

    There are only so many cars Honda can sell... and there's only so many people who can sign up for Facebook.

    It's what you do to recover or reinvent yourself that is important.

    Apple's been through quite a few changes in their almost 40 year history.
  • Reply 13 of 140
    Dismal financial report. I wonder, though, did they take a write-off operating income to reflect recent litigation awards to Apple?
  • Reply 14 of 140
    Quote:

    Originally Posted by Pooch View Post



    for those who would gloat ... apple will be in the same position one day. not if, but when. just sayin'.



    Wrong. Absolutely NOTHING is inevitable, and as long as you try to predict the future by extrapolating from the past, you'll continue to be wrong.

     

    Apple's culture is fundamentally different than Samsung's.

     

    It should be obvious by simply observing Samsung's products and from observing how the company has conducted itself in various areas: patent infringement, litigation, advertising, etc. The words "belligerent", "unscrupulous", "boorish", "out of touch" come to mind. All these factors which are "wrong" have to have consequences, and I thing we're beginning to see them manifest themselves.

     

    In (stark) contrast, Apple's culture has been keenly focused on producing the best possible products, and all of its organization has been established to support and back that. How many other companies do that? Precious few. But those that do tend to survive much longer. So if Apple can maintain its identity, its character, its quality, they stand a good chance of surviving and out-surviving most any other company.

  • Reply 15 of 140
    formosaformosa Posts: 261member
    Quote:
    Originally Posted by mpantone View Post

     

    Samsung's Q4 will be worse. 

     

    Pre-orders for Apple's new iPhones outstripped existing Samsung Galaxy handsets.


     

    Xiaomi is soaring (at the low end), and Apple is just getting started with the new phones (at the high end). Q4 will indeed be brutal for Samsung.

  • Reply 16 of 140
    danielsw wrote: »

    Wrong. Absolutely NOTHING is inevitable, and as long as you try to predict the future by extrapolating from the past, you'll continue to be wrong.

    Apple's culture is fundamentally different than Samsung's.

    It should be obvious by simply observing Samsung's products and from observing how the company has conducted itself in various areas: patent infringement, litigation, advertising, etc. The words "belligerent", "unscrupulous", "boorish", "out of touch" come to mind. All these factors which are "wrong" have to have consequences, and I thing we're beginning to see them manifest themselves.

    In (stark) contrast, Apple's culture has been keenly focused on producing the best possible products, and all of its organization has been established to support and back that. How many other companies do that? Precious few. But those that do tend to survive much longer. So if Apple can maintain its identity, its character, its quality, they stand a good chance of surviving and out-surviving most any other company.

    There's something unique about Apple as well, for the last twenty years people have been predicting it's doom. So Apple always has to work under this atmosphere of "they think we're doomed". Gotta be irritating enough that they keep trying to prove the naysayers wrong.
  • Reply 17 of 140
    jonljonl Posts: 210member

    There can be only one conclusion from this...

     

     

     

     

     

     

     

     

     

     

     

     

    Apple is doomed!

     

  • Reply 18 of 140
    slurpyslurpy Posts: 5,384member

    Can't fucking articulate how giddy this makes me. Couldn't happen to a more classless, trashy, corrupt, and empty company. 

     

    It's been painfully obvious that Samsung has had exactly ONE trick up its sleeve when it comes to selling phones- size. That's literally it. (and a ridiculous advertising budget) Noone gave a shit about any of the other gimmicks they threw in. And they rode that lie there was no tomorrow. Hopefully, this trend keeps going and they end up in the toilet. Can't wait to see what moronic movies they make next during desperation mode. They have no platform strengths to speak of, and nothing of true value. 

     

    I'm tempted to collect all the laughable "Samsung is the next Apple" articles that have been churned out in the last couple years, but that would take ages. Any moron could see Samsung ha no real longterm strategy, beyond the next quarter. Now, they're fucked, and deservedly so. Hopefully the other OEMS step in and strip more sales away. Samsung has blown it's entire wad already, and Apple has significantly strengthened its platform in the last year. 

     

    Let's not forget every single time someone uses Apple Pay, that's an iPhone ad right there. 

  • Reply 19 of 140
    Quote:

    Originally Posted by boredumb View Post

     

    He's saying it because nothing lasts forever, as marvelous as Apple's accomplishments are

    (and will continue to be, for however long).

     

    It isn't as though anyone's wishing for it.

    But you always chase the lead dog, and, sooner or later, a better dog comes along.  

    And, as industries go, this is an especially volatile one by nature.

    Let's just enjoy it and hope we have years and years to do so.


    Nonsense. Name one such dog. Even in the remote horizon.

     

    He was trolling. Perhaps you are too.

  • Reply 20 of 140
    There's something unique about Apple as well, for the last twenty years people have been predicting it's doom. So Apple always has to work under this atmosphere of "they think we're doomed". Gotta be irritating enough that they keep trying to prove the naysayers wrong.

    Exactly.

    Take the Macintosh for instance. For 30 years... the Mac has NEVER had a dominant position against the PC. Many said Apple was doomed.

    Now look at all the PC manufacturers who are either completely gone or who have been absorbed by other struggling companies.

    Apple marches to the beat of their own drum. :)
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