The company logo is displayed at the Samsung news conference at the Consumer Electronics Show (CES) in Las Vegas Jan 7, 2013. —Reuters Photo

SEOUL: Samsung Electronics, the world leader in mobiles and memory chips, said it likely earned a quarterly profit of $8.3 billion, as it sold close to 500 handsets a minute and as demand picked up for the flat screens it makes for mobile devices, including those for rival Apple Inc products.     

That run of five straight record quarters may end in January-March on weaker seasonal demand, though a strong pipeline of smartphones – the South Korean group’s biggest earner – and improving chip prices have eased concerns that earnings growth could slow this year, powering Samsung shares to record levels last week.

The stock closed down 1.3 per cent on Tuesday, in a Seoul market that fell 0.7 per cent.

“Investors are a bit concerned that Samsung’s momentum may slow in the first half. The smartphone market is unlikely to sustain its strong growth as advanced markets are nearing saturation despite growth in emerging countries,” said Kim Sung-soo, a fund manager at LS Asset Management.

Samsung has outpaced Apple - its biggest rival and biggest customer - despite the US firm’s launch of the latest iPhone 5, with sales momentum boosted by its Galaxy Note II phone-cum-tablet, or ‘phablet’, in the fourth quarter. IPhone 5 sales were a little below expectations, analysts said.

While Apple rolled out just a single new smartphone last year globally, Samsung bombarded the market with 37 variants tweaked for regional and consumer tastes, from high-end smartphones to cheaper low-end models. By comparison, Taiwan’s HTC Corp released 18 models, Nokia 9 and LG Electronics 24.

HTC on Monday said its fourth-quarter profit slumped more than 90 per cent as its sales continue to trail those of the Galaxy range and the iPhone.

Samsung, valued at close to $230 billion, gave its October-December earnings guidance on Tuesday, ahead of the full earnings release expected by Jan. 25.

A high note

Shipments of Samsung’s flagship Galaxy S III, which overtook the iPhone 4S in the third quarter to become the world’s best-selling smartphone, are likely to have slipped to around 15 million in the last quarter from 18 million in July-September, analysts estimate, but sales of around 8 million Galaxy Note II ‘phablets’ should more than make up for that - pushing overall smartphone shipments to around 63 million.

“The Note was selling well, boosting fourth-quarter profit, while iPhone 5 sales were less than expected,” said Song Myung-sub, an analyst at HI Investment & Securities.

“Samsung’s profit will drop in the current quarter because of decreased phone profits. It will launch the Galaxy S IV only in March or April so, without new models, phone sales prices will fall this quarter. For the whole year, Samsung will launch new models faster than Apple and have the upper hand in the smartphone market.”

The new Galaxy, widely expected to be released within months, may have an unbreakable screen and full high-definition quality resolution boasting 440 pixels per inch, as well as a better camera and a more powerful processor.

“Samsung’s smartphone shipments are likely to grow even in a seasonally weak first quarter. The early launch of the Galaxy S IV would drive second-quarter growth momentum,” said BNP Paribas Securities analyst Peter Yu, who predicts Samsung’s 2013 operating profit will grow 25 per cent to almost $35 billion.

Samsung is expected to increase its smartphone sales by more than a third this year, and widen its lead over Apple as it offers a broader range of mobile devices, said Neil Mawston, executive director at market researcher Strategy Analytics, which forecasts Samsung will sell 290 million smartphones this year, up from a projected 215 million in 2012.

Apple is expected to push up iPhone sales to 180 million from last year’s 135 million, Mawston told Reuters last week, Kim Sung-in, an analyst at Kiwoom Securities, sees Samsung shipping 320 million smartphones this year and doubling sales of its tablets to 32 million.

Strong numbers

Samsung said its October-December operating profit jumped 89 per cent to 8.8 trillion won from a year ago, just ahead of a forecast for 8.7 trillion won by 16 analysts surveyed by Reuters. That is 8.6 per cent higher than its previous record of 8.1 trillion won in July-September.

Analysts expect profits from the mobile division to more than double from last year and increase slightly from the previous quarter, to around 5.8 trillion won. A recovery in chip prices and flat screens should also boost component earnings, helped by booming sales of mobiles carrying Samsung’s chips, micro-processors and flat screens.

Reflecting the strong outlook, shares in Asia’s most valuable technology stock last week hit a life high of 1.584 million won ($1,500). The stock gained 44 per cent last year, topping Apple’s 31 per cent increase and easily outpacing a 9 per cent rise on the broader Korean market.

Samsung, led by founding family member and Chairman Lee Kun Hee, is embroiled in a patent legal battle with Apple globally. Apple won a US$1.05 billion verdict against Samsung in August, but has failed to win a permanent sales ban on several, mostly older Samsung models.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

‘Source of terror’
Updated 29 Mar, 2024

‘Source of terror’

It is clear that going after militant groups inside Afghanistan unilaterally presents its own set of difficulties.
Chipping in
29 Mar, 2024

Chipping in

FEDERAL infrastructure development schemes are located in the provinces. Most such projects — for instance,...
Toxic emitters
29 Mar, 2024

Toxic emitters

IT is concerning to note that dozens of industries have been violating environmental laws in and around Islamabad....
Judiciary’s SOS
Updated 28 Mar, 2024

Judiciary’s SOS

The ball is now in CJP Isa’s court, and he will feel pressure to take action.
Data protection
28 Mar, 2024

Data protection

WHAT do we want? Data protection laws. When do we want them? Immediately. Without delay, if we are to prevent ...
Selling humans
28 Mar, 2024

Selling humans

HUMAN traders feed off economic distress; they peddle promises of a better life to the impoverished who, mired in...