Despite Strong Smartphone Sales, Samsung Reports Lower 3Q Profit

By Ashok Bindra October 28, 2011

Despite booming smartphone shipments, which were estimated to have surpassed those of industry pioneer Apple, Samsung Electronics reported a lower third quarter profit due to weaker demand for flat-panels and computer chips. The quarterly profit slid by 23 percent, as per the company’s financial report.

According to the Associated Press, Samsung, the world's biggest manufacturer of memory chips and liquid crystal displays (LCDs), said on Friday that it earned 3.44 trillion won ($3.1 billion) in the three months ended Sept. 30, down from 4.46 trillion won ($4 billion) a year earlier.

As per the AP report, Samsung’s flat- panel business suffered a quarterly loss of 90 billion won ($81.5 million). Consequently, its revenue of 7.08 trillion won ($6.4 billion) was down 13 percent from the previous year. Likewise, the report indicates that Samsung's semiconductor businesses had revenue of 9.48 trillion won ($8.6 billion), a drop from last quarter.

However, the AP report shows that the manufacturer’s telecommunications business achieved record quarterly sales of 14.9 trillion won ($13.4 billion), a 37 percent increase from last year. The strong telecom quarter is attributed to growth in Galaxy smartphone sales.

Daiwa Securities’ technology analyst Jae Lee estimated that Samsung had shipped about 28 million smartphones in the third quarter, up from about 20 million last quarter, surpassing Apple's iPhone shipments, wrote AP reporter Foster Klug. Furthermore, Klug added, “Lee expects strong sales in the next three months as Samsung continues to focus on an array of smartphone products.”

When asked for comments on Samsung’s performance in the smartphones arena, “Samsung spokesman Nam Ki-yung wouldn't comment on whether Samsung had passed Apple in smartphone sales, saying the company no longer provides its sales figures for handsets,” wrote Klug. However, added Klug, the company did say that handset shipments jumped more than 20 percent from last quarter, and global smartphones sales were up 300 percent from last year.

Per financial report, the South Korean company’s handset revenues were 14.42 trillion won ($13 billion) in the third quarter, a 39 percent jump from last year. And is forecasting strong sales.

According to Technology Business Research, Samsung’s handset business now contributes more than a third of consolidated revenue and is the main driver of revenue growth for the company. With competition intensifying in the handset space, evident in increasing pressure on ASP’s as smartphone prices are driven lower, Samsung continues to shift its mix toward higher-margin smartphones and away from traditional feature phones. TBR said that Samsung, along with HTC, is one of the only handset makers able to drive significant profits from Android handsets, a result of its focus on the high-end, higher-margin segment of the smartphone market.


Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves

TechZone360 Contributor

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