Galaxy drives Samsung to record fourth quarter
Operating profit surges to $4.5bn on mobile device success as Korean giant puts further pressure on Apple
Published: 6 January, 2012
READ MORE: Financial | Samsung | Handset
Samsung sealed the triumph of its delayed but convincing smartphone push in 2011, reporting a record fourth quarter profit in which surging sales of the Galaxy range were a key factor.
The other main contributor to the strong figures (only preliminary at this stage) was the sale of the hard drive business to Seagate and these two factors resulted in operating profit of KRW5.2 trillion ($4.5bn), up from KRW3.02 trillion in the December quarter in 2010 and well ahead of analyst estimates. Sales were up 12% to KRW47 trillion.
Cellphone sales set a new record of 300m units in the year and the mobile device push will be further intensified in 2012 to offset falling profits in chips and flat screens, with Samsung trading on its ability to create broad portfolios, with models tweaked for different carriers, countries and consumer profiles. As well as Galaxy, it offers the Wave range, running its own bada operating system, plus WP7 and featurephone devices, and also controls the Linux-based Tizen platform with Intel
"The mobile business is generating a huge chunk of profit now," James Song of Daewoo Securities told Bloomberg. "It may be getting harder for Apple to catch up because they only have a limited number of models."
Operating profit may be KRW200bn higher or lower than today's preliminary estimate when audited results are announced later this month, Samsung said. The company did not provide net income figures or a divisional breakdown yet. Analysts estimate that operating profit at the telecoms division, which includes handsets and the smaller wireless infrastructure business, will be up 81% year-on-year to KRW2.6 trillion on a 36% rise in sales to about KRW16.45 trillion. Samsung added that full year sales were up 6.5% on 2010, to a record KRW164.7 trillion, but operating profit fell by 6.7% to KRW16.2 trillion.
Samsung overtook Apple in the third quarter to become the world's largest smartphone seller after shipping 27.8m units, three times more units than a year earlier, a feat which doubled the Korean giant's market share. Dongbu Securities estimates that the firm sold 32m smartphones in the fourth quarter, mainly because of the success of the Galaxy S II, which shipped in May and broke the 10m-unit barrier more quickly than any previous Samsung product. Total handset sales for 2011 are expected to reach about 300m.
On the dark side, profit at the semiconductor division is expected to have fallen by 11% to KRW1.6 trillion on sales of KRW9.65 trillion because of slumping prices of DRAMs and the slowdown in the PC memory space, though Samsung suffered less than rivals because it is stronger in mobile memory. Its shipments of smartphone DRAMs are thought to have doubled in the quarter, according to iSuppli. TVs and displays were also under intense pressure.
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