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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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RE: Griping over an American company
By retrospooty on 4/8/2013 1:34:53 PM , Rating: 2
"How can a superior OS have fewer killers apps and so many bad ports? What good is a flashy UI when the stuff you're navigating to is so limited?"

I totally agree with that statement... The only thing "wrong" with it is that its not an accurate description of Android in 2013. It would certainly fit Android in 2010/2011. Like I keep saying, you need to update your spin.

As for the rest... Look, I get that you like Apple. You dont need alot from your phone, other than apps. It works for you and that is good. I require more from my phone, I need it to be more dynamic and to do more. That huge list isnt all petty stuff, regardless if YOU dont use them... The vast majority of it is highly useful, with a few being opinion and niche. Like I said, if you dont need it and like a small low res phone with great battery life and apps, and dont care about a modern UI or the giant list of missing features the iPhone is a great phone. Clearly millions and millions like it just fine. You dont need to sing its praises or defend it here, its falling on deaf ears (people that know better).

RE: Griping over an American company
By TakinYourPoints on 4/8/2013 9:09:22 PM , Rating: 2
Keep telling yourself its close, it isn't. It's like heaing a Linux fanatic say that GIMP is better than Photoshop.

At best you're finally seeing ports of staple iOS apps from 2008 like Instapaper getting on Android, what, four years later? Big news is something as simple as an old iOS coupon clipping app finally getting on Android, the same weekend Blizzard announces an entirely new game for Mac/PC/iOS and 2K Games announces a straight PC port of X-Com 2012, both on iOS and with no plans for Android. I know you think games are irrelevant so there's also the pro industry. You talk about inferior maps, hell, the aviation industry uses iOS devices for their flight docs now: Then there's medical, financial, media, best-in-class utilities for SSH/FTP, etc.

Yes, I know you aren't a pilot or a doctor or a media pro, but this is about the depth and quality of the app ecosystems. Whatever you need, the best versions are on iOS. Android having as many apps doesn't mean much when high end developers either aren't developing for it or are making half-baked ports. So much of that Android number is inflated by shovelware, cloneware, and malware. Even Microsoft has most of their mobile software on iOS without Android versions. Heck, Google has better versions of GMail and Maps on it.

Unless its something ultra-mainstream like Netflix or Angry Birds it just isn't the same. Maybe that's all you need and you can deal with second-class apps for the rest, that's understandable.

It isn't about "liking Apple". I know that's hard to understand since you come at this from an emotional point of view where Android is your "home team". For me its all about the best product for what I want. I own products in multiple ecosystems (Microsoft, Apple, Amazon, Sony, Nintendo, etc). My favorite tablet is a Kindle e-reader for chrissakes.

I want more apps on my boring desktop, so I use Windows. Same with iOS, I'll take a "boring" but solid OS any day so long as it has better applications. What use is a "flashy" Android UI when there's so less to actually DO with the OS? Its like the flashy Linux CompizUI mods. All glitz but who cares?

You dont need alot from your phone, other than apps. It works for you and that is good. I require more from my phone, I need it to be more dynamic and to do more.

Apps define usage, apps are everything. Apps are what separate smartphones from featurephones and dumbphones. Is a dumbphone all you need?

Smartphones (and to an even greater degree tablets) are app machines, without them they lose functionality. Android having inferior apps by definition means inferior functionality as defined by third parties.

If I didn't care about third party applications then I'd just dump Windows for a Chromebook.

You clearly don't use your phone very much. If you're fine with vanilla apps and ultra-mainstream stuff then I can totally see why you're can't see the point. If you're not missing anything then why would you even know to care?

If usage is defined by SD cards then that's totally fine, I totally get it, but don't pretend the app or polish situations are the same. I completely understand that I give up 5"-6" screens for greater software utility and OS polish. You either don't want to accept or don't understand the degree of utility you're giving up for bigger screens and SD card slots.

An objective person, any reviewer on Anandtech for instance, understands the advantages of Android hardware (multiple configurations, etc) while also understanding its weaknesses (applications, polish, support).

My only issue is how much in denial you are. You pretend there are no weaknesses at all, which is insane. EVERY platform has deficiencies, its all about choosing the right balance. You're like the Baghdad Bob of Android. :)

I'm not trying to change your mind, just own what you like and accept where it falls short. I have no problem doing that myself.

RE: Griping over an American company
By Manch on 4/9/2013 8:48:11 AM , Rating: 2
Stop, just stop.

foreflight is not the type of map software he's talking about and you know it. He's referring to Apples map sotware used to replace googlemaps. As for foreflight, there are equivalent programs used by the industry available for Android as well.

By retrospooty on 4/9/2013 10:13:25 AM , Rating: 2
I dont think he can stop. Its some kind of obsession. Anyone that disagrees he has to post a 10 paragraph dissertation on why his is the only view that matters.

Meanwhile, Android is firing on all pistons. Even though it has surpassed IOS in almost every way, its not resting, still improving constantly while IOS stagnates.

By retrospooty on 4/9/2013 10:11:33 AM , Rating: 2
Like I said... 2010 called, it wants is arguments back. In 2013, everything you post about apps is not true. Again, you act like IOS is a 10 of 10 and Android is 2 of 10 on a 10 scale. Its more like IOS is a 9 and Android an 8. It's not like there are no apps and no support. You want to say apps are bettter on IOS, I agree, its a bit better, but you argue like Android has nothing at all going on and that is just a pure lie. There are tons of great apps, games and there isnt a single thing you can do on IOS that you cant on Android. the opposite is not true period, end of story.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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