Print 17 comment(s) - last by tastyratz.. on Oct 10 at 8:59 AM

The future looks bright for Samsung as it charges pass Apple

I. Awesome Earnings, Despite Business Transition

Samsung Electronics Comp., Ltd. (SEO 005930) is predicting 28 million smartphones sold globally in calendar Q3 2011, which ended August.  That number would likely allow it to depose Apple to become the world's top maker of smartphones.

Most of Samsung's sales are of Android handsets, but the company is hedging its bets, releasing a new smartphone based on Microsoft's Windows Phone 7.5 "Mango", later this month.

Samsung says that it is expected to reveal earnings of 4.2T won ($3.5B USD), much more than the consensus forecast of 3.4T won by analysts surveyed by Thomson Reuters I/B/E/S, and more even than the bullish street view of 3.9T.  That would represent a gain of 12 percent over the previous quarter.

Samsung Galaxy S II
Samsung is poised to become the world's top manufacturer of smartphones. [Source: Samsung]

While it also represents a drop of 14 percent of earnings from the same quarter a year before, investors greeted the news with optimism.  Samsung is currently transititioning from an earnings foundation of electronics component sales, to a profit model founded on device sales, such as smartphones and tablets.  A drop in earnings is expected as Samsung eases into this new model -- the good news is that drop appears to be much smaller than even the analysts' relatively optimistic predictions.

II. Some Risks Loom for Samsung

Samsung isn't without its concerns.  

Memory prices are weakening -- they dropped 50 percent over the corner, with Citi and UBS believing that Samsung is the only memory maker still profitable.  In a way that's a good thing for Samsung, because the field of competitors may soon shrink, raising prices.  But in a short term it's also a bad thing for the company in terms of profitability.  While Samsung's DRAM may still turn a profit, that profit is much lower than before.

Samsung DRAM
Samsung is reportedly the last profitable DRAM manufacturer. [Source: regmedia]

Apple is reportedly looking to phase it out as its NAND flash supplier.  Flat screen prices are also weakening.  

Samsung also could face some backlash due to the fact that it's currently thriving off an inflationary currency.  The U.S. government is upset at South Korea and China for allowing rampant inflation, which makes these nations' products cheaper to U.S. consumers that offerings from domestic firms.

III. Outlook is Bright

But analysts seem inspired by Samsung's better than expected earnings and smartphone sales.  Some analysts go as far as to argue that Apple's new iPhone 4S -- which some complained lacked enough improvements -- won't be much of a challenge for Samsung's flagship Galaxy S II.  States Kyung Woo-hyun, a fund manager at Daishin Asset Management, "The Galaxy S II probably played a key role in boosting the company's earnings and it will continue to do so pretty much unchallenged, until Apple unveils a better new version of iPhone."

Ahn Seong-ho, an analyst at Hanwha Securities, went as far as to say, "I previously thought Apple's new iPhone would slow Samsung's handset earnings momentum, but there was no iPhone 5, and the iPhone 4S will not be a burden on Samsung in the fourth quarter."

But Samsung is not resting on its laurels.  It's reportedly preparing to unveil new higher resolution Android smartphones, including the flagship Android 3.5 "Ice Cream Sandwich model, the Nexus Prime.

On the tablet front, despite recent traction from new entrant, Inc. (AMZN), Samsung is still the most clear cut challenger to Apple.  In that sector Samsung hopes to boost sales with a refreshed 7-inch tablet (the Galaxy Tab 7 Plus) and a smartphone-tablet hybrid, the Galaxy Note (5.3-inch), which join a diverse family of tablets and smartphones spanning many sizes.

Current Galaxy device family

Despite having a market cap of only $118B USD (lower than some American tech giants like Apple), Samsung has the world's highest revenue of any technology firm -- $180B USD -- according to the Reuters.  Last quarter Apple -- who has the world's largest market cap -- was number one in smartphones and tablets.  This quarter it looks like Samsung may seize first place in smartphone sales and creep closer to Apple in tablet sales.

Source: Reuters

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

Sorry guys
By Roy2001 on 10/7/2011 12:57:18 PM , Rating: 3
I could not post, I tried and always got "This comment is apparently spam and we do not allow spam comments". Then suddenly it posted it 5 times. I swear I am not spamming.

RE: Sorry guys
By amanojaku on 10/7/2011 1:05:08 PM , Rating: 2
No worries. Most of us were thinking the same thing, so we'll just say those are echoes. :-)

RE: Sorry guys
By vol7ron on 10/9/2011 12:14:36 PM , Rating: 2
Yeah but do you think think "Samsung charges pass Apple", or maybe it should be "Samsung charges past Apple"?

..btw it says my comment is spam too.

RE: Sorry guys
By Tony Swash on 10/7/2011 1:06:36 PM , Rating: 1
I could not post, I tried and always got "This comment is apparently spam and we do not allow spam comments". Then suddenly it posted it 5 times. I swear I am not spamming.

There is something really weird about the spam filter on this site, every so often it blocks perfectly ordinary comments. I tried to use the word s h o e once and discovered that the spam filter always block comments with the word s h o e in them. I just tested it and still does (at least for me it does - be interesting to see if it's the same for anybody else) hence needing to space the letters out. Really odd.

RE: Sorry guys
By adiposity on 10/7/2011 1:08:44 PM , Rating: 2
Wow, you are right. I can't mention either.

RE: Sorry guys
By Reclaimer77 on 10/7/2011 1:09:59 PM , Rating: 2
There is something really weird about the spam filter on this site

Yeah, it still lets your ass make posts!

RE: Sorry guys
By amanojaku on 10/7/2011 1:29:08 PM , Rating: 2
South Park: Krazy Kripples

Stan: Stay clear, guys. Stay clear.
Kyle: Yep, I'm not seeing anything.

RE: Sorry guys
By Tony Swash on 10/7/2011 5:45:21 PM , Rating: 2
Yeah, it still lets your ass make posts!

But apparently not if it has a s h o e stuck in it :)

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken

Copyright 2015 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki