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  (Source: Getty Images)
And that's all without the Galaxy S IV

Apple, Inc. (AAPL) won't announce its fiscal Q2 2013 (calendar Q1 2013) quarterly earnings until April 23, but South Korea's Samsung Electronics Comp., Ltd. (KSC:005930), has already started things off with a bang, issuing impressive earnings guidance.  The record profits come before the company even started shipping its flagship smartphone, the Galaxy S IV, which will go on sale later this month.

I. Samsung Approaches Apple in Profitability

With Apple predicted to draw $10.1B USD, Samsung showed just how close it is getting to the American firm in profitability.  Samsung's earnings guidance suggests an 8.7T won ($7.7B USD) profit, up over 50 percent from the 5.7T won ($5.0B USD) profit it posted in the first calendar quarter of 2012.  Samsung predicts sales of around 52T won ($45.93B USD).

That's a bit of a surprise -- a survey of 10 analysts by UK-based Financial Times, a Pearson PLC unit (LON:PSON), found an expectation of 8.0T won ($7.0B USD) in profit.  A newer compilation by Bloomberg of 39 analysts' predictions showed an average expectation for 8.4T won ($7.4B USD) in profit.
 

Samsung is nearing Apple in profitability. [Image Source: Cult of Mac]

Samsung's mobile sales are expected to rise around 40 percent on a year-to-year basis.  Mobile is expected to post a profit of around 6.25T won ($5.5B USD), remaining Samsung's most lucrative division (Samsung's large component electronics, display, and household electronics units typically post leaner margins).

When you take just the smartphone sales of Samsung's mobile unit, the company appears to be nearly as profitable as its archrival Apple, a feat analysts long thought would be impossible for an Android phonemaker.

It was an eventful quarter for Samsung, which saw Apple's $1.05B USD copyright infringement verdict over it start to unravel with a pair of patent invalidations by the U.S. Patent and Trademark Office (USPTO).  Samsung also scored a 3 percent stake in rival Japanese TV display maker Sharp Corp. (TYO:6753), paying around 10.4B yen ($108M USD).  The move could be a threat to Apple's supply chain, as Sharp is the second largest producer of iPhone displays.

II. Galaxy Phones Outsell iPhones by Almost 2-to-1

Samsung does not announce its unit sales of smartphones, but IBK Securities analyst Lee Seung Woo predicts that the record sales will come on the back of 68.5m smartphones sold globally.

Apple is expected, according to the Financial Times analyst survey, to have sold around 37m iPhones in the first three months of 2013, indicating a roughly 2-to-1 lead in unit sales for Samsung.

Galaxy S IV
The Galaxy S IV lands later this month. [Image Source: Samsung]

The earnings guidance may further trouble Apple investors who were recently disturbed by a research note from Citigroup Inc. (C) analyst Glen Yeung who suggested Apple may miss its own earnings guidance.  Mr. Young is predicting Apple may make as little as $40.5B USD in revenue (which in turn would indicate a "weaker" profit in the $9B USD ballpark).  

He predicts Apple will only move 34 million smartphones for the quarter (almost precisely half Samsung's shipments).  In his note he wrote, "In conducting our regular field work with the hardware supply chain, we again find evidence of reduced demand to Apple's suppliers for iPhone 5 related components.  While production does not directly translate to sales (for example, we estimate Apple finished 1Q13 (Dec) with [around] 10M iPhone units in inventory), we suspect this is an indication of softer demand for iPhone 5 and iPhone 4S."

Samsung has stated that it hopes to climb to 390m smartphone sales in 2013.

III. Packed Lineup of High-End Hardware Ahead

What's more, Samsung appears to be firing on all cylinders without even unleashing its strongest weapon -- the Galaxy S IV.  Excitement for the GSIV -- which packs a bigger screen (5-inches; 1080p), better camera (13 MP) and hands-free gestures -- is running wild.  In his note Lee Seung Woo predicts Samsung to sell 82m smartphones in Q2 2013.

Galaxy S IV
The Galaxy S IV is expected to be a top seller this summer.

Nomura Holdings, Inc. (TYO:8604) analyst Chung Chang Won told Bloomberg that the GSIV is expected to be a fast seller out the gate, commenting, "Second-quarter profit [April-June] looks even better than the first, as the Galaxy S4 will have a great impact.  Samsung’s shipments of its flagship smartphone will outpace that of the iPhone sometime in the second or third quarter."

There are more boosts waiting on the horizon as well.  Samsung is expected to refresh its popular Galaxy Note tablet mid-year.  The company is also rumored to be producing a superphone with an Intel Corp. (INTC) powered processor, which will run Intel and Samsung's co-developed Tizen mobile Linux kernel/UI.  And there are rumors of a 6.3-inch Android "Galaxy Mega" smartphone on the horizon.  Last, but not least, Samsung is rumored to be slating a GSIV-like smartphone for release with Microsoft Corp.'s (MSFT) upcoming Windows Phone Blue platform this fall.

Like Apple, Samsung is rumored to be developing a wristwatch-like smartphone/mini-tablet/media-device.

In short, Samsung has a packed lineup on the high end while Apple is not expected to launch its iPhone 5S (or iPhone 6, possibly) counteroffensive until June 2013 at the earliest [source].

IV. U.S. Sales Still Need Improvement, But Samsung Excels in China

If there's one weak spot in Samsung's stellar performance, it's U.S. sales -- which happen to be the strongest spot for Apple.  In September-November Apple grew its share of U.S. subscribers to 39.8 percent, while Samsung only reached 21.3 percent.  While that balance will likely shift with the GSIV launch, it remains to be seen if Samsung will be able to beat Apple in its home court.

However, Samsung stands head and shoulders above Apple in performance in developing markets.  While the iPhone is seen as a status symbol among China's elite, Apple is still reeling from a PR disaster regarding poor warranty support in China, which led the nation's state-run media publications to skewer the American firm with scathing articles.

Samsung China
Samsung is performing well in China, even as Apple reels from negative publicity.
[Image Source: Venture Beat]

Glen Yeung -- the same Citi analyst who predicts an Apple miss for this last quarter -- says that the Chinese boondoggle could cost Apple around $13B USD in sales, owing to ill-will in the nation's largest mobile market.

Samsung meanwhile continues to ascend in Chinese sales and enjoys a warm relationship with the Chinese media.  Meritz Securities analyst notes, "In addition to the Galaxy S3, mini models sold well in emerging markets, including China, Brazil and India.  Samsung’s continued ascent in the smartphone industry seems to be unparalleled."

Sources: Samsung on Newswire, Bloomberg



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

Typical Jason
By Shadowself on 4/5/2013 2:27:15 PM , Rating: -1
Jason, does Samsung pay you to write such long and glowing advertisements for them?

While Samsung has had an excellent first calendar quarter for mobile phones (and especially smartphones) worldwide -- and that exceptional pace should continue, or maybe even accelerate, in the second calendar quarter with the new Samsung phones coming out (not just the flagship GS4), only Jason would write,
quote:
With Apple predicted to draw $10.1B USD, Samsung showed just how close it is getting to the American firm in profitability. Samsung's earnings guidance suggests an 8.7T won ($7.7B USD) profit
Does Jason really expect people to believe that 7.7 is "close" to 10.1? Most people I know would expect a 9.x to be close to 10.x, but not Jason when it comes to the Apple/Samsung rivalry.

And there's this...
quote:
Samsung also scored a 3 percent stake in rival Japanese TV display maker Sharp Corp. (TYO:6753), paying around 10.4B yen ($108M USD). The move could be a threat to Apple's supply chain, as Sharp is the second largest producer of iPhone displays.
While it has been widely reported that Apple is going to other display makers besides Sharp. And anyone with half a brain knows that 3% of an international is not controlling interest. Besides, Samsung has shown repeatedly that if Apple is willing to pay they are willing to sell to Apple.
quote:
The earnings guidance may further trouble Apple investors who were recently disturbed by a research note from Citigroup Inc. (C) analyst Glen Yeung who suggested Apple may miss its own earnings guidance. Mr. Young is predicting Apple may make as little as $40.5B USD in revenue (which in turn would indicate a "weaker" profit in the $9B USD ballpark).
He predicts Apple will only move 34 million smartphones for the quarter (almost precisely half Samsung's shipments). In his note he wrote, "In conducting our regular field work with the hardware supply chain, we again find evidence of reduced demand to Apple's suppliers for iPhone 5 related components. While production does not directly translate to sales (for example, we estimate Apple finished 1Q13 (Dec) with [around] 10M iPhone units in inventory), we suspect this is an indication of softer demand for iPhone 5 and iPhone 4S."
So let's check this.
1) Apple's forward guidance has always been notoriously conservative. It has been that way since way back when after Apple made a standard forecast then had to assess down (reassessing its guidance before the end of the quarter) by about 10% and the stock price dropped about 50% in a single day because of it. Apple senior management will never let that happen again which is why the Street always considers Apple's forecast as the most conservative.
Apple could easily miss the Street's expectations (as it did last quarter), but Apple missing its own guidance? Very unlikely.
2) He's predicting a downturn in Apple sales even though a. iPad 4 sales were severely constrained in CY1021Q4 with "make up sales" for pent up demand in CY2013Q1, b. iPad mini was even more so, and c. the iPad 4 and iPad mini constraints and makeup pale in comparison to the incredibly inept handling if the iMac roll out in 2012 that has caused much more significant make up sales in CY2013Q1.
3) Just for the iPhone 5, Apple had a backlog of orders/wait times for the iPhone 5, some as much as four weeks at the end of CY2012, in many venues around the world. It makes no sense for Apple to make people wait for up to four weeks for an iPhone if they have 10 million sitting on the shelf. Apple has been notoriously bad at predicting customer consumption of their products (and especially so in the fourth calendar quarter of 2012!) but even Apple is not so stupid as to have people wait up to four weeks when the product is sitting on the shelf.
Bottom line? This analyst is pulling crap out of the air (or some darker place). However, Jason is perfectly willing to quote him no matter what the credibility of his statements is.

And yet again Jason tells the wrong half of the story...
quote:
However, Samsung stands head and shoulders above Apple in performance in developing markets. While the iPhone is seen as a status symbol among China's elite, Apple is still reeling from a PR disaster regarding poor warranty support in China, which led the nation's state-run media publications to skewer the American firm with scathing articles.
Yes, Samsung has higher sales than Apple in China -- and likely will for some time to come, maybe forever. However, the Chinese media has been proven to have paid many personalities to fuel that skewering which led to a widely reported (though not by Jason) backlash against the media.

Further, Jason again quotes the idiot...
quote:
Glen Yeung -- the same Citi analyst who predicts an Apple miss for this last quarter -- says that the Chinese boondoggle could cost Apple around $13B USD in sales, owing to ill-will in the nation's largest mobile market.
I guess Mr. Yeung has not read any of the reports that Apple is now getting glowing support from the Chinese media (after Cook's published apology for the misunderstandings, and virtually no change in the Apple policy), and that the media's reports (except by Jason) claim that not only will Apple's sales increase, but they will likely pick up another Chinese carrier (China Mobile) because of it.

Just for the record...
I do expect Samsung to keep accelerating in its smartphone sales. Samsung has several new and interesting things coming online. I do expect Apple's sales to start to stagnate. (If you did purchase an iPhone 5, what can an iPhone 5S give you that will compel you to buy it?) I do believe Apple has done nearly everything it possibly could to have hurt itself in the second half of 2012, but has corrected many (but NOT most) of those things in the first few months of 2013. Apple has a long, long laundry list of things it needs to fix, I've given several lists (pertaining to everything from hardware to software to sales to product availability) showing Apple stupidity on these threads before. If it does not fix these things Apple may find that 2013/2014 will be just like 1993/1994 with the return of the so called "dark days" at Apple.

However, Jason's fawning on Samsung while inappropriately (and in some cases inaccurately) denigrating Apple just bugs me sometimes.




RE: Typical Jason
By xti on 4/5/13, Rating: -1
RE: Typical Jason
By Alexstarfire on 4/10/13, Rating: 0
"We’re Apple. We don’t wear suits. We don’t even own suits." -- Apple CEO Steve Jobs














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