Forget about TV’s the big money earner for Samsung in the last quarter was mobile phones and tablets PC’s, also adding to the Korean Companies coffers were component orders from arch rival Apple. 80% of Samsung sales come from foreign markets like Australia.
On Friday Samsung Electronics, the world’s second-biggest maker of mobile phones by volume, reported big jump in profits while their arch rival LG reported a record slump with the Company blaming “poor” sales of mobile phones as a big contributor.
The Korean Company said that its fourth-quarter net profit rose 12.6% from a year earlier to $3.06 billion due to robust smartphone shipments, but it was the most difficult three months of a record-setting year for the company.
Two of the company’s four divisions – memory chips and liquid crystal displays, or LCDs – experienced substantially smaller profits in the October-to-December period than they did earlier in the year. Meanwhile, the division that makes their flat panel TVs, computers and other finished consumer goods experienced a second straight quarterly loss.
Only Samsung’s mobile phone division showed improvement against results from earlier in 2010 and over 2009.Contributing to the growth was the Galaxy S smartphone and the Galaxy Tab tablet PC which achieved record sales. In Australia, Samsung is still holding the price of the 7″ Galaxy Tab at over $900, while the same device is selling for sub $450 in the USA.
The Korean Company also shipped a record 280 million units, of mobile phones in 2010 which was up 23 per cent from a year earlier. The company attributed the gain to greater sales of higher-margin smartphones and the introduction of a tablet computer powered by Google’s Android operating software. In the last quarter alone the Company shipped 80.7 million mobile phones, up from 68.8 million in the fourth quarter of 2009.
While it is not known how Samsung Australia performed in the past quarter, it is known that the mobile phone division headed by Vice President Tyler McGee was the best performing division for the Company.
Samsung’s chip business, due primarily to purchases by Apple, contributed the most bottom line profit. Its operating profit margin of 19.5% was up from 16.8% in the fourth quarter of 2009 but down from 32% in the third quarter of 2010.
The mobile phone business which primarily relies on relationships with Telstra, Optus and Vodafone reported an operating profit margin of 11.9%, up from 10.3% in the year-ago period and 10.2% in the third quarter.
Meanwhile their TV business which has been suffering from margin erosion in Australia, reported a marginal operating profit margin of just over 1%, down from 7.3% a year ago and 6.4% in the third quarter. The company idled some of its LCD panel production capacity to cope with reduced demand as TV sales grew slower than industry forecasts.
Samsung’s consumer-goods division, its largest by revenue, reported a loss of about $150 Million despite sharp growth in TV sales. The company is the world’s largest TV maker.
In 2011 Samsung is set to compete head on with HTC, Motorola and Apple for market share with the Company set to get close to matching Apple in the smartphone and tablet PC market according to David Steele the head of strategic marketing for Samsung Electronics North America.
During an interview with ChannelNews at the CES Show in Las Vegas,Steele said “We are looking to growing our mobile phone and tablet business in Australia and we are confident that we can grow our IT business with a new range of notebooks that also double as a tablet, new monitors and storage devices. We are very confident”.
During the next few weeks the Company is set to announce several new Smartphones for the Australian market, as well as a new Galaxy Tablet with a press event scheduled to be held during the upcoming Mobile World Congress in Barcelona in early February.
“Samsung’s Galaxy lines are the only major competitors to Apple’s iPhone and iPad at the moment, while the other companies like Nokia, LG Electronics and Motorola are still struggling to come up with a competitive device to take on Apple,” said Park Kang-ho, an analyst at Daishin Securities.
Samsung has sold about 10m units of the Galaxy S since its June launch of the smartphone based on Google’s Android operating system, and about 2m units of the Galaxy Tab tablet PC in the past three months. It is fast catching up with Apple, which sold more than 7m iPads and 16.2m iPhones last quarter alone.
According to the Financial Times in the UK analysts predict Samsung will face stiffer competition this year, as other rivals begin introducing their own offerings in the high-margin mobile device market.
“With global economic uncertainties remaining, we continue to expect some tough business environments in 2011, such as intensifying price competition for set products and price declines for major component products,” Robert Yi, Samsung’s chief of investor relations, said in a conference call.
The global smartphone market is forecast to grow more than 40 per cent this year to over 400m units, while the tablet PC market is forecast to more than double to 55m units.