Stellar Galaxy sales push Samsung to $5.9bn profit

Strong sales of Samsung’s Galaxy S III handset has pushed the company’s profits to a record $5.9 billion for the quarter to June.

Stellar Galaxy sales push Samsung to $5.9bn profit

Profits for the handset division of the company doubled and the surge is expected to continue as the latest Galaxy model enjoys a sales boom before the next iPhone launch, widely expected in October.

“Solid results from the TV division show its resilience to the euro zone crisis, while the mobile division has become a strong cash cow on the back of strong Galaxy sales,” said Seo Won-seok, an analyst at Korea Investment & Securities.

“Weak memory chip prices remain the biggest concern for Samsung in the third quarter, but it will again fare better than rivals as its reliance on Apple, which tends to squeeze suppliers quite a bit, is small compared to the likes of Hynix and Toshiba. It’ll have less margin pressure.”

Regardless of Apple’s performance, Samsung will be strong in the third quarter. Actually, for Samsung, Apple’s stumble is a chance

JK Shin, head of Samsung’s telecoms business, said recently that sales of the Galaxy S III, the most aggressive competitor to the iPhone, were better than his initial forecast of at least 10m units in the first two months after its launch in late May.

It is also preparing a sequel to the popular phone-cum-tablet Galaxy Note later this year to counter Apple’s new product releases.

Samsung, which earlier this year ended Nokia’s 14-year reign as the top global handset maker, is estimated to have increased smartphone shipments to 50.5m in the June quarter, nearly double the 26m iPhones sold.

Biting Apple?

Apple shipments in the June quarter tumbled 26% sequentially as the European economy sagged and consumers held off on buying ahead of the release of the next iPhone.

“Regardless of Apple’s performance, Samsung will be strong in the third quarter,” said Byun Han-joon, an analyst at KB Investment & Securities. “Actually, for Samsung, Apple’s stumble is a chance.”

Analysts estimated that Samsung, which now controls more than a third of the global smartphone market, will sell 15m to 20m of its Galaxy S III in the September quarter.

Samsung’s $5.9bn profit is up 79% from a year ago, but its net profit of $4.5bn is only half of the $8.8bn Apple returned in the last quarter from its iPhone, iPad and Mac computer sales. Samsung’s gross margin of 37% also lags Apple’s 43%.

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