Samsung’s profits jump 76% Y-o-Y, in dead heat with Apple
(Nvonews.com)
After blockbuster results from Apple, all eyes were on Samsung, which has emerged as its most potent rival. The South Korean company did not disappoint. Samsung posted results that set records in their own right. Samsung Electronics Co declared $4.7 billion in quarterly operating profit. Its profits for the October-December period was 5.3 trillion which set a record for Samsung’s quarterly profit, overtaking its second quarter profits of 5 trillion won for 2010. The profits jumped 76% y-o-y, and reflected a jump of 25% over the previous quarter.
Samsung profits were driven by booming sales of smartphones, it was the leading phone maker by volume even though has been overtaken by Apple in the last quarter. The company announced it will invest $22 billion this year to increase its production of chips and flat screens to overtake its rivals.
Though Samsung did not provide concrete sales figures, it did say its phone shipments rose by 30% indicating a figure of 36 million, about a million shy of Apple’s 37.4 million phones. Apple only entered the smartphone market in earnest in 2010, three years after Apple came to the market with its smartphone the iPhone. Even then, it has done better than any other company in giving Apple a run for its money. It seeks and often succeeds in providing Apple’s smooth experience at a better price, and with more flexibility. Its flagship phone the Galaxy S II has sold exceptionally well, earning 2.64 won in profits for Samsung.
Samsung has an edge over Apple in that it is also a maker of high quality flat screens, and chips. It even supplies these to its rival Apple. The two companies are locked in a dead heat in the smartphone market, and are fighting patent infringement battles in many courtrooms across the globe.
“This year, the smartphone market will expand to more mid-and low-end models that are affordable to the wider public,” said Baik Jae-yer, a fund manager. “Rather than focusing on market share, I would point out the strong contribution of Samsung’s handset business to earnings growth and margins. The battle of the two big smartphone powers, Apple versus Samsung, will go on.”
It is a point to be noted though, that Apple makes far more money form iPhone than Samsung does from its smartphones. Apple has a 37.4% operating margin while Samsung gets just 11%.
Apple made $17.3 billion in profits from phones, four times that of Samsung.
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