Galaxy phones power Samsung to record $ 8.3 b profit

Reuters: Samsung Electronics, the world leader in mobiles and memory chips, said it likely earned a quarterly profit of $ 8.3 billion, as it sold close to 500 handsets a minute and as demand picked up for the flat screens it makes for mobile devices, including those for rival Apple Inc products.

A Samsung Galaxy Note II phone-cum-tablet is displayed during the first day of the Consumer Electronics Show (CES) in Las Vegas, 8 January 2013. REUTERS

That run of five straight record quarters may end in January-March on weaker seasonal demand, though a strong pipeline of smartphones – the South Korean group’s biggest earner – and improving chip prices have eased concerns that earnings growth could slow this year, powering Samsung shares to record levels last week.

Samsung has outpaced Apple – its biggest rival and biggest customer – despite the US firm’s launch of the latest iPhone 5, with sales momentum boosted by its Galaxy Note II phone-cum-tablet, or ‘phablet’, in the fourth quarter. IPhone 5 sales were a little below expectations, analysts said.

While Apple rolled out just a single new smartphone last year globally, Samsung bombarded the market with 37 variants tweaked for regional and consumer tastes, from high-end smartphones to cheaper low-end models. By comparison, Taiwan’s HTC Corp released 18 models, Nokia 9 and LG Electronics 24.

HTC on Monday said its fourth-quarter profit slumped more than 90% as its sales continue to trail those of the Galaxy range and the iPhone. Samsung, valued at close to $ 230 billion, gave its October-December earnings guidance on Tuesday, ahead of the full earnings release expected by 25 January.

Shipments of Samsung’s flagship Galaxy S III, which overtook the iPhone 4S in the third quarter to become the world’s best-selling smartphone, are likely to have slipped to around 15 million in the last quarter from 18 million in July-September, analysts estimate, but sales of around 8 million Galaxy Note II ‘phablets’ should more than make up for that – pushing overall smartphone shipments to around 63 million.

The new Galaxy, widely expected to be released within months, may have an unbreakable screen and full high-definition quality resolution boasting 440 pixels per inch, as well as a better camera and a more powerful processor.

Samsung is expected to increase its smartphone sales by more than a third this year, and widen its lead over Apple as it offers a broader range of mobile devices, said Neil Mawston, executive director at market researcher Strategy Analytics, which forecasts Samsung will sell 290 million smartphones this year, up from a projected 215 million in 2012. Apple is expected to push up iPhone sales to 180 million from last year’s 135 million, Mawston told Reuters last week, Kim Sung-in, an analyst at Kiwoom Securities, sees Samsung shipping 320 million smartphones this year and doubling sales of its tablets to 32 million. Samsung said its October-December operating profit jumped 89% to 8.8 trillion won from a year ago, just ahead of a forecast for 8.7 trillion won by 16 analysts surveyed by Reuters. That is 8.6% higher than its previous record of 8.1 trillion won in July-September.

Reflecting the strong outlook, shares in Asia’s most valuable technology stock last week hit a life high of 1.584 million won. The stock gained 44% last year, topping Apple’s 31% increase and easily outpacing a 9% rise on the broader Korean market.

Samsung, led by founding family member and chairman Lee Kun-hee, is embroiled in a patent legal battle with Apple globally. Apple won a $ 1.05 billion verdict against Samsung in August, but has failed to win a permanent sales ban on several, mostly older Samsung models.