Seen on Bloomberg: Samsung, the world’s top maker of TVs and mobile phones, reported a record profit surpassing analysts’ estimates as it widens the lead over Apple in smartphone sales on the popularity of Galaxy devices.
Operating profit jumped 91 percent to 8.10 trillion won ($7.3 billion) in the three months ended in September, the Suwon, South Korea-based company said in a statement today. The average of 32 analysts’ estimates compiled by Bloomberg was 7.58 trillion won. Earnings at the mobile-phone business surged 93 percent in the quarter with the May debut of the Galaxy S III and the Note, according to a Bloomberg News survey of six analysts, helping mask a slump in profit from selling computer-memory chips. TV sales also helped Asia’s biggest consumer-electronics company, which lost a California patent trial in August to rival and key customer Apple.
“Smartphone sales were very solid,” Kim Young Chan, a Seoul-based analyst at Shinhan Investment Corp., said by phone today. “Smartphone shipments have increased significantly, easing concerns about marketing spending eating into profit.”
Samsung probably shipped 57.1 million smartphones in the third quarter, according to Seoul-based Daishin Securities Co.’s estimate. That would surpass the 50.5 million units Samsung shipped in the previous quarter, a record amount for a single vendor, according to estimates from industry researcher Strategy Analytics.
Sales of the Galaxy S III surpassed 20 million units in the 100 days after its May debut, Samsung said Sept. 6. The company also is marketing the Galaxy Note II phone, equipped with a pen and a larger screen than the S III, after the first version sold more than 10 million units. “Thanks to the successful launch of the Galaxy Note II, Samsung’s smartphone earnings will stay on the steady trend in the fourth quarter,” Shin Hyun Joon, a Seoul-based analyst at Dongbu Securities Co., said in a Sept. 28 report.
Samsung is accelerating its diversification away from PC memory to more profitable products used in mobile devices. The company, the biggest semiconductor supplier for Apple and the exclusive manufacturer of processors powering the iPhone, said in August it will invest about $4 billion in its Texas factory to boost output of the processors in smartphones and tablet computers. Samsung’s display business had an operating profit of 875 billion won, compared with a loss of 90 billion won a year earlier, according to the survey. The company is benefitting from demand for displays used in mobile devices as sales of flat-screen TVs stagnate. Sales of mid- to small-sized screens probably accounted for 65 percent of operating profit at the display business, according to IBK Securities Co.’s estimates.
Our take: Smartphone shipments continue to surge. No matter who’ll win the race, Samsung or Apple, app makers are the true winners of this development. We continue to prefer G5 Entertainment before Glu Mobile in that space. Not to forget our current trading idea Bitzio, whose share price has enjoyed a nice run the last two days. More is likely to come, we believe.