Samsung’s mobile-phone unit, the biggest seller of smartphones in China and worldwide, more than doubled operating profit as it lured consumers with a range of devices and prices starting below the cost of the iPhone. Apple’s profit grew at the slowest pace since 2003 in the quarter as its lack of a low- cost iPhone dented growth in emerging markets.
“It was another strong quarter for Samsung,” said Heo Pil Seok, chief executive officer at Midas International Asset Management Ltd. in Seoul, which oversees about $5.5 billion of assets, including Samsung shares. “The question is how much more will Samsung continue boosting its market share as Apple (AAPL) staggers and competition from Chinese companies intensifies.”
The company’s handset unit, which ships about a quarter of all mobile phones worldwide, posted an operating profit of 5.44 trillion won, compared with 2.56 trillion won a year earlier. The display division, which makes flat panels for TVs, made a profit compared with a year-earlier loss helped by sales of next-generation organic light-emitting diodes, or OLED, screens used in its Galaxy phones.
Overall operating profit rose 89 percent to 8.84 trillion won. A stronger currency cut the figure by about 360 billion won, the company said in a statement. The appreciating currency may cut full-year 2013 earnings by more than 3 trillion won, it said.
In China, Samsung was the market leader in smartphones in the third quarter, while Apple ranked sixth behind four local companies, according to IDC. Nationwide sales may rise 44 percent this year to 300 million, spurred by cheaper units.
The Samsung 7568 Galaxy smartphone is available for as little as 1,299 yuan through China Mobile Ltd. (941) The cheapest iPhone on Apple’s China website, an 8-gigabyte iPhone 4, costs 3,088 yuan. The latest iPhone 5 starts at 5,288 yuan. Neither company provides sales data by region.
Samsung, also the world’s largest maker of TVs and computer-memory chips, declined 0.3 percent to 1,449,000 won at 9:46 a.m. in Seoul trading. It’s gained 30 percent in the past year. Apple plunged 12 percent yesterday in New York, the most in more than four years, after reporting fourth-quarter profit that was little changed from a year earlier.
Samsung’s capital spending this year will be similar to 2012 levels, the company said. Samsung also supplies chips for the iPhone, and it’s in a global legal dispute with the U.S. company concerning patents.
The Korean company may sell 59.7 million smartphones in the first quarter, double the tally for Cupertino, California-based Apple, Lee Sun Tae, a Seoul-based analyst at NH Investment & Securities, said before the earnings announcement. Samsung probably sold 63 million in the fourth quarter, according to Morgan Stanley. Apple shipped 47.8 million iPhones in the period, boosted by a new model and holiday-season demand. Samsung doesn’t provide shipment data.
A record 700 million smartphones were shipped in 2012, with more than half of those coming from industry leaders Samsung and Apple.
Samsung shipped an estimated 213 million smartphones, or roughly 30 percent of the market, according to Strategy Analytics.
“Despite tough competition in stores and courtrooms, Samsung continued to deliver numerous hit models, from the high-end Galaxy Note II phablet to the mass-market Galaxy Y,” Strategy Analytics said in a blog post.
Apple, meanwhile, saw its shipments rise 46 percent, to 135.8 million giving the company roughly the same 19 percent of the market it had a year earlier.
Nokia remained the third largest smartphone vendor globally, but saw its market share drop from more than 15 percent in 2011 to just 5 percent in 2012 as the decline in Symbian devices more than offset the growth in Windows Phone devices.
In all, smartphone shipments globally were up 43 percent from 2011, the research firm said.