Samsung Electronics posted record quarterly profit of US$5.15 billion, driven by booming sales of its smartphones and the Galaxy Note “phablet,” which it hopes will show it has a flair for innovation to match rival Apple Inc.
The Note — part phone, part mini-tablet — with a throwback stylus and screen half the size of Apple’s iPad, has sold more than 5 million since launching in October last year, and is proving a surprise money earner for the South Korean electronics giant that has a reputation as a “fast follower” rather than design leader.
“Higher-than-expected shipments of the Galaxy Note seem to have given an upside to earnings,” said Lee Ka-keun, an analyst at Hana Daetoo Securities. “Note sales will increase further in the second quarter and handset profit will grow despite a rise in marketing costs related to the London Olympics.”
Samsung, which raced to the top of the global smartphone rankings last year with close to a fifth of the market, from just 3 percent in 2009, is set to go head-to-head with Apple this quarter with the expected launch of a revamped Galaxy S, its flagship smartphone.
“They will engage in a full-fledged war,” Lee said.
The Note sits somewhere between a small tablet and a big smartphone, and its early success illustrates that a maturing mobile device market can open up new opportunities as users and manufacturers experiment with form. Samsung has driven the Note with its marketing and distribution clout.
“We’re seeing a shift in the marketplace and there’s room for diversity,” said Shivesh Vishwanathan, senior solutions architect at Persistent Systems.
Put together by Samsung’s design chief Lee Minhyouk as a smartphone “taboo breaker,” the Note increases the pressure on gadget stragglers HTC Corp (宏達電), Nokia Oyj and BlackBerry maker Research in Motion Ltd.
HTC released quarterly results yesterday that showed net profits shrank by about 70 percent from a year ago, battered by competition from Apple and Samsung.
Samsung’s January-to-March operating profits were 5.8 trillion won (US$5.1 billion), almost double the year-ago level and above a consensus forecast of 5 trillion won from analysts surveyed by Thomson Reuters I/B/E/S. It also topped the preceding quarter’s previous record of 5.3 trillion won. Revenues were 45 trillion won.
Asia’s most valuable technology firm, worth about US$191 billion, released its January-to-March estimates yesterday ahead of detailed quarterly results due on April 27.
Choi Do-yeon, analyst at LIG Investment & Securities, said the bigger-than-expected jump in Samsung’s first-quarter earnings, while revenues were in line with forecasts, indicated handset margins were strong.
“Handset margins are estimated to have topped 20 percent and profits from the division also topped 4 trillion won. This is really a blowout result and there could be more surprises in the coming quarters as other businesses such as chips show recovery,” he said.
Apple had an operating margin of more than 37 percent in the October-to-December quarter.
Samsung is expected to have shipped a record 44 million smartphones in the first quarter just ended, up by almost 25 percent from October-to-December levels, according to a survey of analysts.