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Samsung's semiconductor unit also posts a strong quarter; company loses 3G anti-Apple lawsuit in Germany

Samsung Electronics Comp., Ltd.'s (KS:005930) created a lot of excitement, when it hinted at a blowout quarter, in pre-earnings talk.  But that excitement has since been overshadowed by Apple, Inc.'s (AAPL) own record-setting 3 months.  Now Samsung has popped back into the picture, with its actual earnings results.  
 
I. A Virtual Tie With Apple

After jumping out to a substantial 65 percent sales lead over Apple in Q3 2011, Samsung is now in a virtual tie with its surging rival in global sales.  Samsung moved 36.5 million units in Q4 2011, compared to 37 million from Apple.

Smartphone sales were a boon for Samsung, whose telecommunications unit reported   17.82T Won (~$15.33B USD) in revenue.  That's approximate 38 percent of the South Korean electronics conglomerate's total 47.3T Won (~$42.14B USD) in sales.  The unit also pulled in net revenue (profit) of 2.64T Won (~$2.35B USD), over half of Samsung's total profit of 5.30T Won (~$4.72B USD).  Overall the telecom unit’s revenue was up 52 percent versus last year, while profit was up 79 percent.

While Samsung's budget feature phones continue to surge in sales, creeping towards Nokia, its iconic smartphones are drawing the most attention.  Samsung was the first OEM to sell an Android 4.0 Ice Cream Sandwich phone in the U.S., launching the Galaxy Nexus around Christmas time.  Its Galaxy S II lineup continues to sell strongly, as well.

Galaxy Nexus

The company has a strong equity position, with over 26.88T Won (~$23.95B USD) in cash.  The company plans 47.8T Won (~$41.59B USD) to research in development in 2012 -- far more than Apple.

Galaxy devices, in hand
Samsung was boosted by strong smartphone and mobile device sales [Image Source: 9to5Google]

Speaking of Apple, Samsung also continues to profit off the success of its rival (and others), thanks to its semiconductor division.  Aside from smartphones, semiconductor sales accounted for the majority of the remaining profit for Samsung.  The unit reported 2.31T Won (~$2.06B USD) on sales of 9.17T Won (~$8.17B USD).  Samsung is reportedly the only remaining profitable DRAM maker.  It continues to perform strongly in the system-on-a-chip business, and it actively expanding production on both the 3x nm (DRAM, SoC) and 2x nm (NAND) nodes.

Samsung's Digital Media and Appliances (DM&A) and display panel businesses struggled amidst slowing stables and the floods in Thailand that hurt component supply.  They did remain profitable, though.  The DM&A pulled in 16.96T Won (~$15.11B USD) in sales, but made only 570B Won (~$507.8M USD) in profit.

Overall this will be remembered as a very strong quarter for Samsung, to cap off a record setting year.  But it will also be overshadowed by Apple's surprising comeback.

II. "Sammy" Loses a Round in its German Case Against Apple

In related news, Samsung has lost yet another lawsuit against Apple, this time in Germany.  Both Samsung [1][2] and Apple [1][2][3][4] have been on losing streaks of late in their lawsuit campaigns against each other.  International courts seem to increasingly be opting to throw out as much of these lawsuits as possible, wary of giving either company an unfair competitive advantage.  Both companies are under investigation in the European Union for abusing the intellectual property system.

Gavel court
International courts are growing tired of Apple and Samsung's lawsuits. [Image Source: Grande Prairie]

Judge Andreas Voss, the presiding judge in Mannheim Regional Court, Mannheim, Germany, gave no reason for the dismissal, according to Florian Mueller of FOSS Patents.  Samsung could still appeal his decision to the Karlsruhe Higher Regional Court, but it's unclear if it will.

Samsung still has 3 more 3G/UMTS cases against Apple in Germany, which it hopes will go better than its last two.  Each of the cases deals with specific patents.  Apple is currently pursuing a new sales ban on Samsung's new tablets, which Samsung redesigned specially to try to satisfy the German court's earlier design infringement claims.

A lower court ruled that the redesign was sufficient, allowing Samsung's tablet sales to resume.  Now it remains to be seen whether that ruling holds.


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How much money is made after the phone is sold?
By kmmatney on 1/28/2012 5:19:45 PM , Rating: 2
One key difference is Apple makes way more money after the sale. They get a piece of every App sold, along with advertisement money. I have no idea what Samsung gets, but I'm sure its not nearly as much. My kids often get iTunes gift cards to buy games for either my iPhone or iPod touch, or the family iPad (they are all linked to my account so we can share). We are constantly spending money at the App store. I've never spent a dime for anything on my wife's LG Android phone.

On a side note, I've never heard of Android having gift cards, which seems like a good idea to encourage people tp pay for Apps.




By Sureshot324 on 1/29/2012 8:13:53 PM , Rating: 2
Samsung probably makes a lot more profit on the phone itself. Apple has no factories and has to pay other companies to build the phone. In fact, I believe Samsung actually makes the Apple A5 processor in the Iphone.

Samsung can manufacture a lot of the components in their phones themselves. They make CPUs, RAM, flash memory and OLED screens. The Android OS itself is free.


"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook














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