Smartphones power Samsung to record profit

January 27, 2012
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Samsung Electronics is the world's largest technology firm by revenue/AFP
SEOUL, Jan 27 – South Korea’s Samsung Electronics on Friday reported a record operating profit of 5.3 trillion won ($4.72 billion) in the fourth quarter, thanks largely to booming smartphone sales.

The company also announced a 25 trillion won investment in its chipmaking and panel-making business.

However, the world’s largest technology firm by revenue slipped to back second place behind rival Apple in terms of smartphone sales, according to research.

Samsung’s telecoms businesses accounted for 2.64 trillion won out of the total quarterly operating profit, with the flagship Galaxy S2 and Galaxy Note brands largely credited for the strong result.

“Despite intensified competition amid the global economic slowdown, our telecommunications businesses continued to post solid earnings with an enhanced line-up of high-end smartphones, resulting in higher average selling price,” said senior vice-president Robert Yi in a statement.

The overall quarterly operating profit figure, a 76 percent increase year-on-year, was largely in line with the earnings guidance issued early this month by the firm.

Revenue in October-December was 47.3 trillion won, a 13 percent rise year-on-year. Net profit of four trillion won was up 17 percent on a year earlier.

For the whole of last year the company logged a net profit of 13.7 trillion won, down 15 percent from the previous year. Revenue rose 6.7 percent to a record 165 trillion won and operating profit declined 6.05 percent to 16.2 trillion won.

Samsung overtook Apple in the third quarter of last year to become the world’s largest seller of smartphones.

But Apple reclaimed the crown in the October-December period thanks to its new iPhone 4S, but the Korean firm was the top smartphone brand for all of 2011, according to data from two research firms.

Apple reported fourth-quarter sales of 37 million units, while researcher Strategy Analytics estimated that Samsung shipped 36.5 million during October-December.

Wayne Lam, senior analyst at IHS iSuppli, also said Apple topped fourth-quarter sales but added that Samsung for all of 2011 become the world’s largest smartphone brand for the first time.

It tipped the overall smartphone market to grow more than 30 percent this year.

Samsung, the world’s largest maker of flat panels, memory chips and flat-screen televisions, announced capital spending of 25 trillion won this year.

Some 15 trillion won of the total would be invested in chipmaking, to improve production lines and upgrade technology. Another 6.6 trillion won would be spent on the display panel division.

The firm also credited a stronger lineup of LED televisions for the improved quarter-on-quarter sales.

It said its chip business sustained profitability in the fourth quarter despite weak market demand, thanks to a mixture of high-margin products and strong demand for NAND flash memory chips used in smartphones and tablets.

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