Galaxy Phones Power Samsung to Record $5.2 Billion Profit

Samsung Electronics Co. on Friday announced a record-high profit as strong smartphone sales helped mask a drop in semiconductor and TV profit.

The company’s handset division shifted more than 20,000 Galaxy phones an hour in the quarter and contributed most of its operating profit. Photo: Samsung Electronics

As the reports claim, Samsung’s shares hit a lifetime high after the results, raising its market value to $190 billion, 11 times that of Japanese rival Sony, though still only a third of Apple’s, the world’s most valuable company.

According to Reuters, the company sold 93.5 million handsets in the quarter, more than one in every four sold, reports Strategy Analytics, toppling Nokia from the top spot after 14 years.

The total included 44.5 million smartphones, giving Samsung a 30.6 percent share of the high-end market. Apple’s sales of 35.1 million iPhones gave it a 24.1 percent share.

“Samsung and Apple are out-competing most major rivals, and the smartphone market is at risk of becoming a two-horse race,” said Neil Mawston, an analyst at Strategy Analytics.

CLSA analyst Matt Evans said in a recent report that “Samsung’s smartphone success in the first quarter was the flip-side of Nokia’s disappointment.”

The highest demand for company’s devices such as the Galaxy Note and the Galaxy S2 released last year, helped mask lower profit from memory chips, another Samsung flagship business.

“It was a shock for semiconductor, a surprise for handset,” said Lee Ka-keun, a Seoul-based analyst at Hana Daetoo Securities.

ABC News writes, that the Suwon, Korea-based company, expects to outdo its record profit in the coming quarters. A new version of the Galaxy phone is reported to be announced next week and global demand for personal computers is picking up, bringing more cash to memory chipmakers.

“We cautiously expect our earnings momentum to continue going forward, as competitiveness in our major businesses is enhanced,” Robert Yi, head of investor relations, said on a conference call.

Nokia, which has been the leader in the smartphone segment until last year, has saced a sharp decline in sales since it abandoned its own smartphone operating system and switched to the largely untried Windows Phone. According to the sources, the company sold only 12 million smartphones in the first quarter.

Bernstein analysts predict that the duopoly in high-end smartphones is unlikely to come under much threat this year or next and the South Korean company will look to keep that momentum going next week with the launch in London of a third generation of Galaxy S, hoping to boost sales ahead of the summer Olympics, where the group is among the leading sponsors.

“The Galaxy S 3’s specifications are expected to be sensational, and it’s already drawing strong interest from the market and consumers,” said Brian Park, an analyst at Tong Yang Securities.

The new Galaxy will reportedly be powered by quad-core microprocessor, which the company hopes to see used in handsets sold by Nokia, HTC and Motorola, as well as Apple, its biggest customer for components.

“We anticipate very strong demand for the Galaxy S 3,” Robert Yi, Samsung’s senior vice president and head of investor relations, told analysts. “When there’s strong demand in the market, we don’t necessarily need to spend a lot of marketing dollars to promote sales.”

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