Sat, Apr 28, 2012 - Page 10 News List

Smartphones lift Samsung profit to a record high

EARNINGS MOMENTUM:The introduction of a new Galaxy phone model next week and recovering chip demand as PC sales rise should support growth


A surge in Galaxy smartphone sales fueled earnings at Samsung Electronics Co to a record high in the first quarter — usually a tough season for the global consumer electronics industry — outshining handset competitors such as Nokia Corp.

Samsung sold more smartphones in the first three months of the year than Apple Inc and raked in more than 70 percent of its operating profit from mobile businesses. Shares of Samsung Electronics shot up nearly 3 percent.

Net profit nearly doubled from a year earlier to a record 5.05 trillion won (US$4.46 billion) for the quarter ended March 31.

Operating profit also logged a record-high 5.85 trillion won, which was in line with the company’s guidance provided earlier this month. Sales rose 22 percent from a year earlier to 45.3 trillion won.

Strong demand for high-end smartphones, such as the Galaxy Note and the Galaxy S2 introduced last year, helped mask lower profit from memory chips, another Samsung flagship business.


“It was a shock for semiconductor, a surprise for handset,” said Lee Ka-keun, a Seoul-based analyst at Hana Daetoo Securities.

The Suwon, South Korea-based firm expects to outdo its record profit in the coming quarters.

It will announce a new version of the Galaxy phone next week and global demand for PCs is picking up, bringing more cash to memory chipmakers.

“We cautiously expect our earnings momentum to continue going forward, as competitiveness in our major businesses is enhanced,” Robert Yi, head of investor relations, said on a conference call.

Samsung’s mobile communications division, which includes smartphones, pocketed 4.27 trillion won in operating profit in the quarter after seeing significant sales growth of high-end smartphones in developing markets, including China, a key battlefield for mobile phone makers.

After narrowly beating Apple last year, Samsung’s smartphone sales exceeded Apple’s by a large margin in the first quarter. Strategy Analytics said Samsung became the world’s top smartphone maker, selling 44.5 million handsets in the January-March period, followed by Apple’s 35.1 million.


While Samsung fights Apple in the smartphone and tablet markets and in bitter patent lawsuits on four continents, its first-quarter results also owed something to brisk sales of Apple’s iPhone and iPad.

Apple, which is Samsung’s key customer in its semiconductor and display screen businesses, was credited for helping turn around Samsung’s display panel division into profit.

Samsung’s display panel business posted a 280 billion won profit as increased sales of lucrative 3D TV panels and high-resolution tablet PC panels propped up the bottom line.

Samsung, which is the world’s biggest supplier of memory chips, said its operating profit from its semiconductor business in the first quarter reached 760 billion won, less than half from a year earlier, while its division that makes TVs and home appliances posted 530 billion won in operating profit.

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