Samsung Posts Another Record Profit In Q3, Offloads LCD Venture

Samsung posts another record profit amid concerns about slowing smartphone sales

Samsung has posted another record profit of 8.24 trillion won (£4.8bn) for the third quarter of 2013, an increase of 26 percent from the 6.56 trillion won (£3.8bn) it made a year ago, matching market expectations.

Sales rose to 59.08 trillion won (£34.3bn) from 52.18 trillion won (£30.3bn) last year as the company benefited from strong performance in smartphones and business chips, but some still hold fears that the South Korean electronics giant will be unable to continue its stellar financial performance.

Record Profit

Samsung Galaxy Round 1“Despite currency depreciation in emerging markets, increased price competition and global market uncertainties, we were able to reach record earnings driven by solid earnings in our core businesses including memory chips and smartphones,” Robert Yi, Samsung’s senior vice president was reported as saying.

“Although we expect demand to increase next quarter due to peak seasonality, lingering macro-economic issues and intensifying market competition will remain in the fourth quarter,” he added.

Samsung admitted on its conference call that sales of its flagship Galaxy S smartphones were flat amid intense competition from rivals, but this was offset by strong growth for cheaper or ‘mass market’ smartphones as well as greater ‘management operating efficiencies’.

Mobile sales rose a modest 2 percent on a quarter-by-quarter basis to 35.2 trillion won (£20.4bn) from 28.40 trillion won (£16.5bn) a year earlier.

However, it is not clear at this stage how well Samsung’s newly introduced Galaxy Gear smartwatch and the Galaxy Round curved phone are selling. The company pointed to the fact that it is now heading into the peak (holiday) season for tablets and smartphones to try and allay any concerns.

Memory Chips

Meanwhile the results showed that its semiconductor unit was something of a star performer for Samsung during the period, after it recorded a 12 percent rise in revenue over the previous quarter to 9.74 trillion won (£5.6bn), compared to $8.72 trillion won (£5bn) a year ago.

The overwhelming amount of that came from Samsung’s memory chip business which attracted revenue of 6.37 trillion won (£3.7bn).

“Samsung has done well, having rapidly caught up with Apple in the smartphone market. But I’m concerned whether Samsung would be able to do better,” Kim Sung-soo, a fund manager at LS Asset Management told Reuters.

“Like Nokia, Samsung may hit a limit in increasing market share. Apple is also fighting back, signalling an uphill battle for Samsung. Samsung needs to show its new growth engines to revive momentum in its stock price.”

LCD Exit

And Samsung also revealed that it expects an additional 1.5 trillion won (£871m) payment from Corning after the US firm agreed to buy its display unit out of an LCD glass venture.

“On top of the already announced detail that Corning will buy out (Samsung Display’s) stake in the glass venture, there’ll be additional payment of dividend, which we estimate at around 1.5 trillion won,” Robert Yi, head of Samsung Electronics investor relations, told analysts.

Meanwhile, there are reports emerging that Samsung is preparing electronic eyewear, similar to that of Google Glass. This came after a design patent was registered with Korean authorities in October. That filing shows an electronic device that has been classified as a type of “sports glasses.”

Earlier this week it was reported that Microsoft is also testing prototypes of Web-connected eyewear.

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