 "Apple bites into Samsung's profits")
Samsung Electronics Co raised its dividend and posted fourth-quarter profit that beat analysts' estimates as demand for memory chips softened the impact from a smartphone business losing sales to Apple Inc and Xiaomi Corp.
Net income, excluding minority interests, was 5.29 trillion won ($4.9 billion) in the three months ended December, the Suwon, South Korea-based company said in a filing Thursday. That compares with the 4.1 trillion-won average of 24 estimates compiled by Bloomberg. Samsung will pay a dividend of 19,500 won a share, up from 13,800 won a year earlier.
Chip sales to rival smartphone makers are boosting earnings even as demand for Samsung handsets stalls in China and India. Vice-Chairman Lee Jae Yong is counting on the next version of the marquee Galaxy S to revive growth at the world's biggest phone maker after higher panel prices and competition pressured profit margins at the consumer electronics unit.
"The Galaxy S6 smartphone is a very important phone for Samsung this year, although they are increasing the number of lower-margin smartphones globally, that's not where they are making a living," said Lee Seung Woo, an analyst at IBK Securities Co. in Seoul. "It will benefit both its semiconductor and mobile businesses."
Mobile Slumps
Operating profit at the mobile-phone unit slumped to 1.96 trillion won from 5.47 trillion won a year earlier. The business was overtaken by chips as Samsung's biggest profit driver in the third quarter.
Samsung, which was passed by Xiaomi in China last year, has probably also been eclipsed by Apple in the world's biggest smartphone market, according to researcher Canalys.
Even at home, Samsung's market share dropped to 46 percent in November from 61 percent in September, while Apple's share rose to 33 percent from 7 percent, according to Counterpoint Technology Market Research Ltd.
Samsung is cutting the number of smartphone models it produces as many as a third to focus on products where it has a competitive edge. This month it said it will start selling a smartphone in India using its own homegrown Tizen software rather than Google Inc.'s Android operating system.
Apple's Surge
On Tuesday, Apple posted the biggest quarterly sales increase in three years as new products such as the large-screen iPhones and refreshed Macs spurred demand.
"Samsung's profits were never going to reach the same heights as Apple's," Dan Wagner, the London-based chief executive officer at Powa Technologies Ltd., said in an e-mail. "They remain the main competitor to Apple, but with so many potential successors in the market, it is now or never for the company to differentiate itself in the sector."
Profit at Samsung's chip business, which makes both memory chips and application processors, was 2.7 trillion won, compared with 1.99 trillion won a year earlier.
The world's second-largest semiconductor maker is said to be switching to its own processors in the next Galaxy S smartphone after Qualcomm Inc. chips overheated during a sample testing, according to people with direct knowledge of the matter. Samsung, which relies on Qualcomm processors for its best-selling mobile devices, is trying to become more self- reliant and boost profit at the chip division.
TSMC Battle
"Qualcomm's Snapdragon problem will benefit both Samsung's mobile and processors divisions," said Song Myung Sup, a Seoul- based analyst at HI Investment & Securities Co. "It may roll out the next Galaxy S device as early as March, when there will be no new rival devices on store shelves to compete with."
Samsung's most advanced chips, which consume less energy than existing semiconductors, should win the bulk of orders for Apple's next iPhones after losing out to Taiwan Semiconductor Manufacturing Co. last year, according to Lee Min Hee, a Seoul- based analyst at I'M Investment & Securities Co.
Capital spending at Samsung this year will rise from the 23.4 trillion won of 2014, the company said without providing a specific forecast.
Profit at the consumer-electronics division, which oversees TVs and home-appliances, dropped to 180 billion won in the quarter from 660 billion won a year earlier because of increased panel prices and competition.
Samsung introduced the first TV sets powered by the Tizen software platform at the Consumer Electronics Show in Las Vegas earlier this month and said all the Web-connected models it sells this year will run the operating system.
Operating profit at the display division, which dominates the market for screens using organic light-emitting diodes, was 470 billion won in the quarter.
Despite falling demand for more profitable Galaxy smartphones, increasing adoption of OLED screens for Samsung's lower-end devices and those of rivals will boost the company's display unit throughout the year, Daewoo Securities Co. said in a Jan. 21 report.
Net income, excluding minority interests, was 5.29 trillion won ($4.9 billion) in the three months ended December, the Suwon, South Korea-based company said in a filing Thursday. That compares with the 4.1 trillion-won average of 24 estimates compiled by Bloomberg. Samsung will pay a dividend of 19,500 won a share, up from 13,800 won a year earlier.
Chip sales to rival smartphone makers are boosting earnings even as demand for Samsung handsets stalls in China and India. Vice-Chairman Lee Jae Yong is counting on the next version of the marquee Galaxy S to revive growth at the world's biggest phone maker after higher panel prices and competition pressured profit margins at the consumer electronics unit.
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Shares of Samsung fell 0.4 per cent to 1,374,000 won as of 9.24 am in Seoul. The stock has risen 3.5 per cent this year after dropping 3.3 per cent last year.
"The Galaxy S6 smartphone is a very important phone for Samsung this year, although they are increasing the number of lower-margin smartphones globally, that's not where they are making a living," said Lee Seung Woo, an analyst at IBK Securities Co. in Seoul. "It will benefit both its semiconductor and mobile businesses."
Mobile Slumps
Operating profit at the mobile-phone unit slumped to 1.96 trillion won from 5.47 trillion won a year earlier. The business was overtaken by chips as Samsung's biggest profit driver in the third quarter.
Samsung, which was passed by Xiaomi in China last year, has probably also been eclipsed by Apple in the world's biggest smartphone market, according to researcher Canalys.
Even at home, Samsung's market share dropped to 46 percent in November from 61 percent in September, while Apple's share rose to 33 percent from 7 percent, according to Counterpoint Technology Market Research Ltd.
Samsung is cutting the number of smartphone models it produces as many as a third to focus on products where it has a competitive edge. This month it said it will start selling a smartphone in India using its own homegrown Tizen software rather than Google Inc.'s Android operating system.
Apple's Surge
On Tuesday, Apple posted the biggest quarterly sales increase in three years as new products such as the large-screen iPhones and refreshed Macs spurred demand.
"Samsung's profits were never going to reach the same heights as Apple's," Dan Wagner, the London-based chief executive officer at Powa Technologies Ltd., said in an e-mail. "They remain the main competitor to Apple, but with so many potential successors in the market, it is now or never for the company to differentiate itself in the sector."
Profit at Samsung's chip business, which makes both memory chips and application processors, was 2.7 trillion won, compared with 1.99 trillion won a year earlier.
The world's second-largest semiconductor maker is said to be switching to its own processors in the next Galaxy S smartphone after Qualcomm Inc. chips overheated during a sample testing, according to people with direct knowledge of the matter. Samsung, which relies on Qualcomm processors for its best-selling mobile devices, is trying to become more self- reliant and boost profit at the chip division.
TSMC Battle
"Qualcomm's Snapdragon problem will benefit both Samsung's mobile and processors divisions," said Song Myung Sup, a Seoul- based analyst at HI Investment & Securities Co. "It may roll out the next Galaxy S device as early as March, when there will be no new rival devices on store shelves to compete with."
Samsung's most advanced chips, which consume less energy than existing semiconductors, should win the bulk of orders for Apple's next iPhones after losing out to Taiwan Semiconductor Manufacturing Co. last year, according to Lee Min Hee, a Seoul- based analyst at I'M Investment & Securities Co.
Capital spending at Samsung this year will rise from the 23.4 trillion won of 2014, the company said without providing a specific forecast.
Profit at the consumer-electronics division, which oversees TVs and home-appliances, dropped to 180 billion won in the quarter from 660 billion won a year earlier because of increased panel prices and competition.
Samsung introduced the first TV sets powered by the Tizen software platform at the Consumer Electronics Show in Las Vegas earlier this month and said all the Web-connected models it sells this year will run the operating system.
Operating profit at the display division, which dominates the market for screens using organic light-emitting diodes, was 470 billion won in the quarter.
Despite falling demand for more profitable Galaxy smartphones, increasing adoption of OLED screens for Samsung's lower-end devices and those of rivals will boost the company's display unit throughout the year, Daewoo Securities Co. said in a Jan. 21 report.