Samsung Electronics

Stellar Galaxy sales lift Samsung to new profit heights

South Korean company rides to record profit in third quarter but will face challenge from Apple and Microsoft's re-energised product lines

PUBLISHED : Saturday, 27 October, 2012, 12:00am
UPDATED : Friday, 08 May, 2015, 12:49pm

Samsung Electronics, the world's biggest maker of televisions and mobile phones, reported a record third-quarter profit that beat analysts' estimates as surging sales of Galaxy smartphones widened the lead over Apple's iPhone.

Net income totalled 6.56 trillion won (HK$46.18 billion), the South Korean company said. The average of 27 analysts' estimates compiled by Bloomberg was 6.25 trillion won.

Earnings at the mobile-phone business increased after the introductions of the Galaxy S III phone and the Note II tablet helped the company compete against Apple, a key customer and opponent in patent lawsuits on four continents.

Samsung faces a tighter marketplace this holiday shopping season after Apple refreshed its product line with a new iPhone, mini iPad and upgraded iPad, and Microsoft released its Surface tablet.

"The mobile-phone number came out very strong," Kim Young-chan, an analyst at Shinhan Investment, said. "It again confirms there's no real competitor out there other than Apple. Samsung's competitiveness in smartphones will be maintained for a while as the Samsung-Apple duopoly continues."

Competition would likely intensify in the fourth quarter amid concern the global economy might slow, Samsung said. The company said it would focus on high-value products to maintain its momentum and would try to boost sales of tablet computers with more pen-equipped models and cheaper devices.

Asia's biggest consumer electronics maker is also introducing new televisions with 3-D and internet-surfing technology to shield its earnings from slumping demand for computer memory chips. Operating profit was 8.12 trillion won, up 91 per cent from 4.25 trillion won the year before. Sales amounted to 52.18 trillion won, equivalent to 19 per cent of South Korea's gross domestic product, were up from 41.27 trillion won a year earlier.

Operating profit at the telecommunications business more than doubled to 5.63 trillion won from 2.42 trillion won, the company said. Sales at the unit totalled 29.92 trillion won, compared with 17.94 trillion won a year earlier.

"Smartphones will continue leading growth into next year," Brian Park, an analyst at Tong Yang Securities, said before the results were announced. "The semiconductor side is not showing a clear recovery, but smartphones held up well this year. It'll be a similar story next year."

Meanwhile, Taiwanese smartphone maker HTC Corp said it expected fourth-quarter revenue to fall 14.5 per cent, although it has been aggressively rolling out new models.