Samsung profits bounce back after 2-year slide, boosted by chips instead of phones
Samsung Electronics on Wednesday called for its operating profits to rise in the third quarter, putting an end to an almost two-year decline -- though the recovery is reportedly based mostly on chip sales.
The company said that its profits likely grew 79.8 percent year-over-year to approximately 7.3 trillion Korean won, or $6.3 billion, according to the Wall Street Journal. Revenue is estimated to have risen 7.5 percent to 51 trillion won ($44.26 billion). Final results are due at the end of October.
Analysts told the Journal that Samsung's chip division was likely responsible for about half of the company's profits, in turn helped by tight supply and solid prices. Another profit aid was display sales to Chinese smartphone makers.
Samsung's mobile division is believed to have done better than last year, thanks to a pared-down lineup and the launch of two high-end phones in August, the Galaxy Note 5 and the Galaxy S6 Edge+. The company deliberately moved up the release of the devices to preempt Apple's iPhone 6s and 6s Plus. It is however offering rebates up to $120 at some U.S. carriers, and making special effort to lure iPhone users, which may have led Q3 mobile profit margins to fall from 11 percent to between 8 and 9 percent.
Analysts say the mobile division likely raised operating profits from 1.75 trillion won ($1.75 billion) to 2 trillion won ($1.73 billion), but still sat in the shadow of the forecast 3.5 trillion won ($3.04 billion) from chips.
Samsung is in fact one of two manufacturers of the A9 chip in the 6s and 6s Plus, and might also be tasked with producing the A9X processor for the iPad Pro. In either case, while increased Apple sales will hurt Samsung's mobile unit, the damage should be alleviated by increased chip orders.
The company said that its profits likely grew 79.8 percent year-over-year to approximately 7.3 trillion Korean won, or $6.3 billion, according to the Wall Street Journal. Revenue is estimated to have risen 7.5 percent to 51 trillion won ($44.26 billion). Final results are due at the end of October.
Analysts told the Journal that Samsung's chip division was likely responsible for about half of the company's profits, in turn helped by tight supply and solid prices. Another profit aid was display sales to Chinese smartphone makers.
Samsung's mobile division is believed to have done better than last year, thanks to a pared-down lineup and the launch of two high-end phones in August, the Galaxy Note 5 and the Galaxy S6 Edge+. The company deliberately moved up the release of the devices to preempt Apple's iPhone 6s and 6s Plus. It is however offering rebates up to $120 at some U.S. carriers, and making special effort to lure iPhone users, which may have led Q3 mobile profit margins to fall from 11 percent to between 8 and 9 percent.
Analysts say the mobile division likely raised operating profits from 1.75 trillion won ($1.75 billion) to 2 trillion won ($1.73 billion), but still sat in the shadow of the forecast 3.5 trillion won ($3.04 billion) from chips.
Samsung is in fact one of two manufacturers of the A9 chip in the 6s and 6s Plus, and might also be tasked with producing the A9X processor for the iPad Pro. In either case, while increased Apple sales will hurt Samsung's mobile unit, the damage should be alleviated by increased chip orders.
Comments
And all the more damaging to Samsung if and when Apple stop using them That's called leverage.
Especially as Microsoft is taking the phone market by storm with their ... Oh wait a minute ...
so when will Samsung begin offering a free finance of phones like Apple.
http://www.droid-life.com/2015/09/21/report-samsung-will-offer-own-phone-leasing-program-like-the-one-apple-just-announced/
Oh stop it. Apple was not even close to being the first to start a program like that. It was a natural evolution of all OEMs.
Especially as Microsoft is taking the phone market by storm with their ... Oh wait a minute ...
While I agree with your snark it makes me wonder how things came to be this way. iOS and Android dominate the mobile operating system market. By all accounts these new Microsoft phones are really nice but it would appear they have little chance of challenging either iOS or Android. Why is that? Microsoft’s mobile OS isn’t all that bad is it? So is it simply momentum by the two top dogs? Has the consumer made their choice and the other mobile OSs will simply struggle along at the bottom? Has Microsoft burned its bridges with the mass market?
Any ideas?
http://blogs.barrons.com/techtraderdaily/2015/10/07/apple-iphone-6s-sales-in-china-below-expectations-says-boutique-researcher-j-l-warren/?mod=yahoobarrons&ru=yahoo
She just based on black market price of the iPhone in China to estimate the sale.
If 1.75 trillion won = $1.75 billion, how does 2 trillion won = $1.73 billion? And 3.5 trillion won = $3.04 billion?
im not familiar with other manufacturers. who else was doing it? i know the carriers were.
Motorola started doing it back in Nov 2013. Nothing wrong with anyone doing it and I'm glad Apple finally started doing it, it's just that for some reason people think that Apple was the first to do it.
Doesn't matter for me as I just buy my iPhones outright.
..... it makes me wonder how things came to be this way. iOS and Android dominate the mobile operating system market....
..... Has Microsoft burned its bridges with the mass market?
Any ideas?
2 things stand out for me, one is they stopped supporting a lot of phones when they made the upgrade (to 7.5??), some of which were nearly new. I wonder if that put some people off buying another one.
The other one is app availability - my Bank has apps for both iOS & Android but not Windows Phone - there just isn't the demand. A chicken & egg situation?