Samsung Profits Soar Thanks to Galaxy Smartphones

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(Photo: Stock.xchng)
(Photo: Stock.xchng)

BUSINESS

  • Samsung sees profit nearly double from 2011
  • Samsung phone shipments in second quarter nearly doubled number of iPhones sold
  • Sales in emerging markets key to Samsung’s continued growth

Samsung Electronics Co., the world’s largest technology company by revenue, has reported a record-setting second quarter thanks to its Galaxy line of smartphones, allowing it to overtake rivals.

The majority of Samsung’s sales come from its mobile division, which includes networking equipment, smartphones and personal computers. In addition, Samsung remains the world’s top television and memory-chip manufacturer.

Sales of Galaxy smartphones have helped Samsung’s profits soar, while sales in other areas have stagnated or fallen. Unlike key competitor Apple, Samsung offers a wide range of smartphone models in a variety of prices, sizes and designs. This advantage helped drive shipments of Samsung phones to nearly double the number of iPhones sold in the second quarter.

The boost in smartphone sales has also driven the sale of Samsung mobile processors.

In the second quarter, which ended June 30, net profit totaled $4.5 billion, 48% higher than in 2011. Operating profit and revenue also grew.

Sales in emerging markets, especially China, are key to Samsung’s continued growth. Growth was also aided by LCD prices.

Samsung Leading Global Handset Maker

Samsung overtook Nokia as the leading global handset maker early in the year, and is outperforming the rest of the market by stock price as investors have confidence the company will continue to grow.

Samsung controls one third of the mobile market, and is expected to sell between 15 million and 20 million Galaxy S III smartphones in the third quarter, analysts say. The Galaxy S III was released in May, and has already sold more than the 10 million units the company predicted.

The third quarter is expected to remain strong as the demand for tablets and smartphones continues to rise. However, the October release of the next iPhone model could slow Samsung sales, but sales of the Galaxy S3 are expected to peak before the new iPhone’s release.

According to market analysts, weak memory chip prices might harm Samsung in the third quarter but not as much as rivals Toshiba and Nynix, which rely heavily on Apple; Apple has a reputation for pressuring suppliers.

A Samsung representative said: “Third quarter is expected to be marginally positive as demand for consumer electronics goods, including smartphones and tablets, remains strong and a stream of new products hit the market.”

In addition to smartphones, chips and televisions, Samsung also manufacturers appliances.

Key Statistics - World Smartphone Market (source: Transparency Market Research)

  • Nearly 75% of smartphone consumers use their smartphones for both personal and business reasons. 
  • By 2015, sales of smartphones to end users are forecast to reach 1.05 million units, with Asia–Pacific accounting for the largest market share at nearly 40%.
  • Globally, 65% of small to medium-sized businesses have policies that allow employees to purchase smartphones.

By Melina Druga for
Melina Druga is an American writer and editor. She is the author of Enterprising Women: Practical Advice for First Time Entrepreneurs.

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