Samsung Ties Apple in Profit, But Disappoints Analysts
July 26, 2013 10:50 AM
Samsung's growth appears stalled amid high-end smartphone slump
In Q2 2013, ending in June, Samsung Electronics Comp., Ltd. (
) saw net profits soar
from 5.19T won ($4.67B USD) in Q2 2012
to 7.77T won ($6.99B USD) or 7.58T won ($6.8B USD) after excluding minority interest -- bringing its net profit to parity with archrival Apple, Inc. (
earnings for this quarter
I. Bullish Galaxy Growth Slows
But despite rising margins and profit, investors are concerned about the slowdown in smartphone sales growth on the most profitable high-end models. Samsung's sales of its premium-to-mid-range Galaxy lineup of flagship Android smartphones grew from 19 million to 22 million on a yearly basis, according to analyst estimates, a growth of 15 percent. By contrast in 2011 Samsung had sold only around 5 million Galaxy S2s, according to Gartner, Inc. (
Overall smartphone sales growth for Samsung (including budget models) follows more of a consistent (in a linear sense) growth track, reaching an estimated 76 million units in Q2 2013. But analysts' earnings expectations were anchored largely on a more bullish growth of sales of the premium Galaxy units.
As a result, Samsung missed by 5.5 percent a consensus profit expectation of 24 analysts
gathered by Bloomberg
of 13 analysts by UK-based
, a Pearson PLC unit (
), had predicted a 7.80T won net profit, just slightly above the delivered result.
Apple saw similar levels of growth in its mix of its premium-priced flagship model and mid-range priced older models. In fiscal Q3 of last year (calendar Q2 2012) Apple
sold 26 million units
, and this year sales grew to 31.2 million units, up 29 percent. However, Apple's unit sales growth in general has been
flatter, but steadier over the last two years
, where as Samsung's started strong but appears to be decelerating.
Part of the problem might be the disappointment over
the Galaxy S IV
. Most expected a more aggressive leap forward, but saw more of a modest spec bump. As a result, the handset
lost out (surprisingly) in many head-to-head review comparisons
to HTC Corp.'s (
II. Samsung's Diversity Saves Its Profit
But again, that only tells half the picture. While Samsung's growth seems to be showing negative momentum on the premium-to-mid-range end (Galaxy v. iPhone), Samsung's revenue and earnings growth tell a far different picture. Samsung's profit has been steadily rising on a quarter-to-quarter basis since 2011. By contrast Apple, despite increasing revenue has slid in profit.
One secret to Samsung's steady increase in profits is its diversity. Despite a
languishing PC market
, Samsung reported surprising rises in profit for its semiconductor and display panel divisions. The semiconductor division -- which is estimated to do $8B USD+ in business with Apple alone this year (its largest customer) saw only a 0.9 percent rise in total revenue, but managed to squeeze out a 70.8 percent rise in profit to 1.768T won ($1.58B USD). Similarly the display panel unit saw a 0.5
in revenue, but managed a much bigger 57.7 percent boost to profit, which reached 1.120T won ($1.01B USD).
Samsung is now producing NAND on the 10-19 nm node. [Image Source: Samsung]
Consumer electronics (which includes dishwashers, refrigerators, microwaves, stoves, and other Samsung-branded household electronics products) was down a fair amount (41.1 percent on a year-to-year basis) to dip to a profit to 430B won ($390M USD).
Samsung's other units benefited from a rise in Chromebook sales. Chromebooks seized
4 to 5 percent of total PC sales
, and Samsung's cheapest Chromebook model was the
best selling personal computer
on Amazon.com, Inc. (
Analysts -- particularly in 2012 -- became fond of deriding Samsung's "unprofitable" units, emphasizing the smartphone unit was the only one driving value. Thus perhaps the most surprising story in the Q2 earnings is Samsung's chipmaking units showing their merits, picking up the slack for the premium smartphone sales slowdown and driving profit up. That performance is fortunate as it helped Samsung avoid a far bigger profit miss.
In short Samsung's report card reads something like:
This is a surprising storyline to say the least, but the good news is Samsung is diverse and looks to be sustaining strong smartphone growth, at least on the budget end. The bad news -- as analyst point out -- is that profit growth may slow, as Samsung is unlikely to be able to sustain such large growth percentages in its other units. That means that the premium smartphones will have to step up in sales, something analysts are concerned they may be unable to do.
Seoul-based CIMB Group Holdings Bhd's analyst explains this pessimism to Bloomberg, remarking, "Samsung is trying to make its profit structure largely balanced. [But its] smartphone margin may decline in the future but the components businesses, either chips or displays, will become a major profit driver to help it sustain the overall profit."
"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive
Apple's Q3 Earnings, iPhone Sales Beat Analyst Expectations
July 24, 2013, 12:00 PM
Microsoft Takes $900M Charge on Surface Flop
July 18, 2013, 6:40 PM
Quick Note: Samsung Chromebook is Top Selling Notebook on Amazon
July 18, 2013, 2:16 PM
PC Shipments Fall Nearly 11 Percent in Q2 2013; Lenovo Beats HP as Top Vendor
July 11, 2013, 10:58 AM
Samsung Galaxy S IV Reviews: Better Than Its Predecessor, But Most Prefer HTC One
April 24, 2013, 10:16 AM
Apple Watch NikeLab Limited Edition unveiled.
April 22, 2017, 6:20 AM
What is the Apple’s iPhone 8 specifications and release date?
April 14, 2017, 5:43 AM
Xiaomi Mi Pad 3 tablet with Hexa –Core SoC, Android Marshmallow
April 6, 2017, 6:40 AM
Vivo launches V5 Plus IPL edition smartphone
April 4, 2017, 11:10 AM
Samsung S8 and S8 Plus: On Sale April 21 at Major Wireless Dealers
March 30, 2017, 7:35 AM
Are You in the Market for Earphones?
March 24, 2017, 7:35 AM
Most Popular Articles
Surface Pro 5 Rumors - New Release Date and Price
April 22, 2017, 6:45 AM
ASUS RT-AC5300 – Ultimate Game & 4K Streaming
April 18, 2017, 7:45 AM
Dell Inspiron 17 7000 – A Premium Laptop featuring 7th Gen Intel Core i7 in a 2-in-1 Frame.
April 19, 2017, 7:45 AM
Meet the Smartphone with four cameras - Alcatel Flashphone
April 5, 2017, 11:20 AM
Vivo V5 Plus – the Selfie Softlight is on You.
April 17, 2017, 7:05 AM
Latest Blog Posts
Samsung Galaxy S8 and S8 Plus – Lots of Glass that Breaks Easily
Apr 25, 2017, 7:20 AM
Samsung Galaxy S8 – Warning for Pet Owners
Apr 24, 2017, 5:59 AM
Sound Bars and the Costs?
Apr 23, 2017, 6:30 AM
Link your Brain to Your Computer – In Four Years…Maybe
Apr 22, 2017, 7:03 AM
Google Home can now identify users by their voice.
Apr 21, 2017, 7:15 AM
Amazon Lex – Now Available for Developers.
Apr 20, 2017, 6:58 AM
You can now use Instagram offline on your Android Smartphone
Apr 19, 2017, 8:00 AM
Now you can livestream to YouTube from your mobile device.
Apr 18, 2017, 8:05 AM
Google Home – Is It a Spy Device?
Apr 17, 2017, 7:30 AM
Apple added to self –driving test permit list
Apr 15, 2017, 6:21 AM
Project Scorpio – Coming on June 11
Apr 14, 2017, 6:20 AM
Looks Like Samsung Has Been Forgiven.
Apr 13, 2017, 6:50 AM
United Airlines - Blasted on China’s Social Network and the Stock Market
Apr 12, 2017, 6:50 AM
Amazon's Third-Party Sellers Hacked
Apr 11, 2017, 6:25 AM
Microsoft Surface Pro5 Details Revealed
Apr 9, 2017, 6:41 AM
Own An Android Phone? Then you could be hacked over Wi-FI
Apr 7, 2017, 6:47 AM
Apple confirms iOS 10.3 bug and its effect on iCloud Services
Apr 6, 2017, 6:30 AM
Apple Rolls Out New Version of Apple Music
Apr 5, 2017, 10:35 AM
Apple in the News
Apr 4, 2017, 9:03 AM
Apple iPhones Will Soon Feature Graphics Chips Designed BY Apple
Apr 3, 2017, 6:23 AM
AMD Ryzen Desktop Processors Performance
Apr 2, 2017, 6:30 AM
More Blog Posts
Copyright 2017 DailyTech LLC. -
Terms, Conditions & Privacy Information