SEOUL — Samsung Electronics, the world’s top technology company by revenue, posted record quarterly operating profit of 5.8 trillion won on booming sales of its Galaxy smartphones and of the Note, a mini-tablet and phone.
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Samsung, which raced to the top of global smartphone rankings last year with close to a fifth of the market, from just 3 percent in 2009, is set to go head-to-head with Apple this quarter with the expected introduction of its revamped Galaxy S to take on Apple’s next iPhone.
“Samsung and Apple are expected to launch the new Galaxy S and iPhone in the second quarter, respectively, and they will engage in a full-fledged war,” said Lee Ka-keun, analyst at Hana Daetoo Securities.
Samsung’s operating profit during the quarter from January to March was the equivalent of $5.1 billion, almost double the level of a year ago and better than a consensus forecast of 5 trillion won by analysts surveyed by Thomson Reuters. It also topped the 5.3 trillion won in the preceding quarter. Revenue was 45 trillion won.
Samsung released its January-to-March estimates Friday. Detailed quarterly results are due on April 27.
“Higher-than-expected shipments of the Galaxy Note seem to have given an upside to earnings,” Mr. Lee said. “Note sales will increase further in the second quarter, and handset profit will grow despite a rise in marketing costs related to the London Olympics.”
Choi Do-yeon, analyst at LIG Investment & Securities, said the bigger-than-expected jump in earnings, with revenue in line with forecasts, indicated handset margins were strong.
“Handset margins are estimated to have topped 20 percent and profits from the division also topped 4 trillion won. This is really a blowout result, and there could be more surprises in the coming quarters as other businesses, such as chips, show recovery,” he said.
Apple had an operating margin of more than 37 percent in the October-toDecember quarter.
Samsung is expected to have shipped a record 44 million smartphones in the first quarter, up by almost 25 percent from October-to-December levels, according to a Reuters survey of analysts.
Samsung introduced the Galaxy Note, a mini-tablet and phone with a screen half the size of the iPad, in late October, and the top-end model has quickly become its core profit earner.
Sales of the Note have topped 5 million, increasing the pressure on HTC, Nokia and Research in Motion.
The handset division is likely to account for about two-thirds of Samsung’s total profits, analysts forecast.
While Apple is Samsung’s biggest rival in smartphones, the U.S. company is also its biggest client, purchasing Samsung’s high-end displays and microchips for the iPhone and iPad. The two are also locked in a bruising global patent war that spans about 30 legal cases in 10 countries.
Samsung’s integrated business model, under which it makes its own application processors and some screens, “is the biggest ingredient of its winning formula, which, in our view, can’t be easily copied,” Daniel Kim, an analyst at Macquarie, wrote in a research note.
Earnings prospects for memory chips, where Samsung is also a world leader, have also brightened since the Japanese company Elpida Memory filed for bankruptcy, prompting its customers to switch to rivals like Samsung and SK Hynix to secure supplies of the chips, which are used in smartphones and laptops.
“Contract chip prices are likely to continue to rise in the second quarter, possibly another 10 to 15 percent, as big customers like Apple, Dell and HP may seek to increase supply in the wake of Elpida’s trouble,” said Choi Sung-jae, an analyst at SK Securities.
HTC’s quarterly profit falls
The Taiwan smartphone maker HTC reported a 70 percent fall in net profit in the first quarter, just below forecasts, Reuters reported from Taipei.
But in a sign of a pickup, HTC also reported that consolidated sales for March were 30.879 billion Taiwan dollars, or $1.046 billion, up from 20.29 billion dollars in February, though still down 16.62 percent from the same month a year earlier.
HTC’s unaudited net profit in the quarter was 4.46
international herald tribune staff
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