Galaxy smartphone leads Samsung to stellar profits

By John Leonard
26 Oct 2012 View Comments

South Korea's Samsung Electronics reported record net profits for the third quarter based on strong sales of its Galaxy smartphones and flat panels.

The world's largest technology company saw net profits grow 91 per cent to Won6.56tn (£3.7bn), while sales increased 26 per cent to Won52.18tn (£29.5bn).

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The rises come largely on the back of strong performances by the mobile division where operating profit doubled in the quarter. According to research firm Strategy Analytics, Samsung sold 56.9 million smartphones in Q3 giving it a 35 per cent market share, while Apple sold 26.9 million.

The display panel business also reported an impressive operating profit of Won1.09tn (£616m) compared with a Won90bn (£51m) loss last year.

Despite these record figures, Samsung shares dropped 1.8 per cent on the South Korean exchange (KOSPI) due to fears that the company faces tougher times ahead.

Among these concerns is the fact that Samsung's semiconductor division saw earnings fall 28 per cent. Increased competition, however, is a greater worry for investors, with the South Korean giant likely to feel the effect of Apple's recent release of the iPhone 5, as well as new Windows 8-based phones from the likes of HTC and Nokia. With the tablet wars hotting up too, Samsung is likely to struggle against competition from Microsoft, Apple, Google and Amazon.

"It will take time for Samsung to narrow the gap with Apple in the tablet market," said Lee Sun-Tae, an analyst at NH Investment & Securities.

Meanwhile, legal battles with Apple rumble on, with cases being heard across four continents.

On Wednesday a judge at the US International Trade Commission (ITC) said that Samsung had infringed four of Apple's intellectual property patents. Should the final decision go against Samsung, the ITC has the power to ban the import of its products into the US.

In such a trading environment, few analysts believe that Samsung will report similarly strong figures for quite some time.

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