Samsung Crushes Earnings, Blows Past Nokia To Become World's Biggest mobile phone Maker

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Photo: Steve Kovach, Business Insider

SEOUL (Reuters) – Samsung Electronics Co, the world’s top technology firm by revenue, reported a record quarterly profit on Friday, as its Galaxy smartphones and Note phone/tablet helped it win market share from Nokia and as it outmuscled Japanese rivals in TVs and memory chips.Samsung did not break out its first-quarter smartphone and handset shipments, but analysts forecast it ended Nokia’s 14-year leadership of the global mobile phone market, outselling the struggling Finnish company for the first time.

Nokia sold 83 million handsets in January-March, including 12 million smartphones. Samsung is estimated to have sold 90 million handsets, including 44 million smartphones, according to analysts.

Samsung reported January-March operating profit of 5.85 trillion won ($5.15 billion), broadly in line with its earlier estimate of 5.8 trillion won, and nearly double the 2.95 trillion won a year ago. In the fourth quarter of 2011, the company had an operating profit of 5.3 trillion won.

Its handset division profit nearly tripled to 4.27 trillion won, accounting for 73 per cent of total profit. Operating profit margin of the division also improved to 18.4 per cent from 11 per cent a year ago and 12 per cent in the preceding quarter, helped by strong sales of the high-end Galaxy S and Note.

Samsung and Apple have formed a near duopoly in the high-end smartphone market, as traditional stalwarts struggle to introduce compelling models that can successfully crack into the segment.

The duo controlled 90 per cent of the high-end smartphone market last year and their combined stake will remain little changed at 88 per cent by 2013, according to Bernstein analysts.

Samsung – which has deals with all three of China’s big telecoms operators – already pushed out Nokia as China’s top smartphone vendor in the fourth quarter, with around 25 per cent market share, and analysts expect that to have increased as Nokia slips further. “Samsung’s smartphone success in the first quarter was the flip-side of Nokia’s disappointment,” Matt Evans, a CLSA analyst, said in a recent report.

China’s smartphone growth has defied most forecasts, and South Korean smartphone chip maker SK hynix this week predicted smartphone sales in China could be 20-30 per cent higher than originally expected, given the level of orders it has seen.

“Overall Chinese demand was very strong in the first quarter and will drive global smartphone shipments to over 700 million this year,” Kim Ji-bum, SK hynix head of global marketing and sales, told analysts.

Samsung, which last year sold close to one in every five smartphones worldwide, should build on that market leadership with the launch in London next week of a third generation of its flagship Galaxy S, backed by heavy marketing ahead of the summer Olympics. The new Galaxy will use Samsung’s quad-core microprocessor, which it hopes to see in handsets sold by Nokia, HTC and Motorola, as well as Apple, its biggest customer.

Samsung also competes with Sony Corp and LG Electronics in TVs, Toshiba and SK hynix in chips and LG Display in displays.

Shares in Samsung, the world’s top TV maker, have climbed 27 per cent so far this year, and hit a record high of 1.351 million won ($1,200) earlier this month. The broader KOSPI stock index is up around 8 per cent this year.

($1 = 1,141.25 Korean won)

(Editing by Jonathan Hopfner)

SEE ALSO: And Now Nokia Has A New Problem — It Might Go Bankrupt

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