Samsung Profits Surge As TV Sales Crash And Smartphones Take Off

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Samsung has reported a record quarterly profit of $4.5 Billion on surging sales of Galaxy phones, components and hard disc drives. While TV sales slumped 21% Smartphone sales surged 80%.

Sales overall rose 12 percent to 47 trillion won.

Mobile-phone sales surpassed a record 300 million units last year with the Galaxy smartphone proving to be oner of the most popular phones in the world.

Samsung, which sold its hard-disk drive business to Seagate Technology, is introducing more mobile devices to offset slumping profits at the chip and flat-screen panel businesses.

“The mobile business is generating a huge chunk of profit now,” James Song, a Seoul-based analyst at Daewoo Securities told Bloomberg “It may be getting harder for Apple to catch up because they only have a limited number of models.”


While smartphone sales helped propelled Samsung’s revenue to a record last year, fourth-quarter operating profit was inflated by proceeds from the Seagate deal, James Chung, a Seoul-based spokesman for the Suwon, South Korea-based company, said by telephone after the announcement.

Samsung said in April it agreed to sell its mechanical- drive business to Dublin-based Seagate for $1.38 billion in cash and stock. Samsung said last month the sale was completed.

Operating profit may be 200 billion won higher or lower than today’s preliminary estimate when audited results are announced later this month, Samsung said. The company didn’t provide net income figures or a breakdown of divisional earnings.

Samsung’s full-year profit sales rose 6.5 percent to a record 164.7 trillion won, while operating profit declined 6.7 percent to 16.2 trillion won.

Galaxy Sales

Operating profit at the telecommunications unit jumped 81 percent to 2.6 trillion won, according to the median of six analyst estimates surveyed by Bloomberg News. Sales at the world’s second-largest handset vendor may have gained 36 percent to 16.45 trillion won.

Samsung overtook Apple in the third quarter to become the world’s largest smartphone seller after shipping 27.8 million units, market researcher Strategy Analytics said in October. Samsung’s smartphone sales more than tripled during the three- month period from a year ago, and its market share more than doubled, it said.

Samsung probably sold about 32 million smartphones in the fourth quarter, according to an estimate from Dongbu Securities Co., helped by the Galaxy range of devices. Galaxy S II sales, which began in May, surpassed 10 million units quicker than any other Samsung mobile device, the company said in a December statement, without providing a total sales figure for the model.

Chip Profit

Samsung sold more than 300 million handsets, including basic types, in 2011, according to the statement.

In October, Samsung and software partner Google Inc. unveiled the Galaxy Nexus, powered by the latest Android operating system that features facial-recognition functions. A month earlier, Samsung introduced the Galaxy Note equipped with a 5.3-inch screen and a stylus.

Profit at the semiconductor division probably fell 11 percent to 1.6 trillion won on sales of 9.65 trillion won, according to the survey.

The price of the benchmark DDR3 2-gigabit DRAM slumped by 51 percent last year amid slowing personal-computer sales, according to data from Taipei-based Dramexchange Technology Inc., operator of Asia’s largest spot market for semiconductors. Chip prices have fallen to as low as a ball of rice, according to Tokyo-based Elpida Memory Inc.

DRAM prices likely will remain at current levels through the first half of this year, with PC demand not picking up quickly, Shin Hyun Joon, a Seoul-based analyst at Dongbu Securities, said in a Dec. 21 report.

TV Shipments

Samsung is faring better than its rivals because of its diversification into specialty chips for mobile devices, Park Hyun, a Seoul-based analyst at Tong Yang Securities Inc., said by telephone before today’s announcement. Shipments of smartphone DRAM probably more than doubled last year from 2010, according to a forecast by researcher IHS iSuppli in October.

Samsung’s display division likely had an operating profit of 6.5 billion won, compared with 100 billion won a year earlier, according to the survey. Sales probably rose to 7.95 trillion won from 7.2 trillion won.

The average selling price of Samsung’s flat-screen panels dropped 21 percent in 2011 amid stagnating TV sales, according to an estimate from Dongbu Securities.

Global LCD TV shipments probably were 206 million units last year, falling short of an earlier projection of 211 million units, according to research company DisplaySearch.

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