Samsung posts record profit thanks to strong Galaxy S III sales

More than half of Samsung's revenue came from its mobile communicatons business

By Yewon Kang, IDG News Service |  

Samsung Electronics said Friday that net profit nearly doubled in the third quarter on strong sales of its Galaxy S III and Note 2, which also boosted results in its component business.

The world's largest maker of mobile handsets said net income came to 6.56 trillion won (US$6 billion) for the quarter ended Sept. 30. Revenue reached 52.18 trillion won, of which more than half came from its mobile communications business.

As it reported earlier this month, Samsung booked a record operating profit of 8.12 trillion won in its third quarter, almost double from 4.25 trillion won a year ago.

The company's flagship Galaxy S III, released earlier this year, continued to do well during the quarter, and analysts said its larger Note 2 device has had a strong early reception. The Note 2 is in the process of rolling out globally.

"Sales of Galaxy S III has been remarkable, we shipped 20 million," said Kim Hyun-joon, vice president of Mobile Communications Business for Samsung, during an earnings press conference Friday in Seoul.

Kim expects that competition among premium devices will get even more intense during the upcoming holiday shopping season, and the company plans further marketing of the Galaxy S III and Galaxy Note II.

The healthy shipments of handset devices helped sales of its OLED, or organic light-emitting diode, displays used in the devices, the Suwon-based company said.

Samsung has shipped about 59 million smartphones in the quarter, of which 27 million are high-end devices including the Galaxy S III and Galaxy Note series, according to Marcello Ahn, an analyst with Nomura Financial Investment.

Main rival Apple sold 27 million iPhones and 14 million iPads in the same quarter. The iPhone 5 was launched in September, about three months later than the Galaxy S III.

Samsung's mix of high-end models will continue to boost the company's profit in the fourth quarter, despite concerns of a slowdown in smartphone sales due to intense competition in the market, Ahn said.

Weak demand in PC DRAM chips slowed Samsung's sales of memory chips, which slid to 5.22 trillion won in the quarter. For the next quarter, the company will focus on server and mobile DRAM and NAND products including Solid State Drives (SSDs) for notebook PCs, Embedded Multimedia Cards (eMMC) and logic chips, said Robert Yi, head of investor relations.

Samsung, which is a major component provider to Apple, has gradually reduced its supply of NAND and DRAM memory chip for the iPhone and iPad but remains a major vendor for application processor chips for Apple devices, including the latest iPad mini, Jeff Kang, an analyst with Daishin Investment and Securities, said in a research note. To offset the decline in orders from Apple, the South Korean company is trying to increase internal component consumption, he added.

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