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Strong smartphone sales fuel Samsung's Q4 net
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South Korean tech behemoth Samsung Electronics Co. said Friday its fourth-quarter earnings grew 17 percent on-year, fueled by strong sales of smartphones and improved chip business.

Net profit amounted to 4 trillion won (US$3.56 billion) in the October-December period, up 17 percent from the previous year, the company said in a regulatory filing. It marked the largest gain since the 4.46 trillion won tallied in the third quarter of 2010.

Sales expanded 13 percent to an all-time high of 47.3 trillion won in the fourth-quarter and operating profit jumped 75.8 percent on-year to a record 5.3 trillion won. The results are slightly higher than Samsung's earnings guidance released earlier this month.

For all of 2011, the company logged a net income of 13.7 trillion won, down 15 percent from the previous year. Its sales rose 6.7 percent on-year to 165 trillion won and operating profit inched down 6.05 percent to 16.2 trillion won.

Analysts said Samsung's strong bottom line mainly stemmed from brisk sales of its smartphones and a one-off profit by selling its money-losing hard drive disk (HDD) unit for around 700 billion won.

"Robust sales of smartphones propped up Samsung's profits in the fourth quarter. Its semiconductor business also turned out to be better than expected," said John Park, an analyst at Daishin Securities.

Market watchers said the trend of healthy earnings is likely to continue into the current quarter on the back of strong shipments of its flagship Galaxy series smartphone and tablet PC products.

For this year, Samsung said global economic uncertainty and currency volatility are likely to serve as risk factors, but the global economy is likely to improve into the second half.

Robert Yi, Samsung's vice president and head of investor relations, said in a conference call that in the first quarter, the economic slowdown is continuing and overall demand may remain weak for a seasonal reason, but his company is likely to continue to see strong sales of smartphones, based on enhanced product lineups.

Prices of dynamic random access memory (DRAM) chips have suffered setbacks as damage wrought by flooding in Thailand, the world's leading maker of computer drives, weighed on global computer markets, squeezing Samsung's profits from the chip division.

Brisk sales of smartphones, mobile chips and display panels for mobile phones, however, offset its weak profits from its memory chip business.

Samsung and Apple Inc., the major players in the global smartphone markets, are in tussle over the status of the world's top smartphone maker.

Samsung surpassed Apple in the third quarter to become the leading smartphone maker for the first time, but it is not clear whether the Korean firm continued to secure the top spot in the fourth quarter.

On Tuesday, Apple said sold 37 million units of iPhone in the cited period, aided by its new iPhone 4S models which went on sales in October.

Samsung did not provide specific numbers of its smartphone sales, but added that the sales grew more than 30 percent on-quarter in the fourth quarter. Analysts projected that Samsung's smartphone sales may have reached around 36.5 million.

Operating profits from Samsung's telecom division jumped 79 percent on-year to a fresh record high of 2.64 trillion won in the fourth quarter.

The company's chip division posted an operating profit of 2.31 trillion won in the cited period, up 29 percent from a year earlier.

Samsung said that it will spend 25 trillion won on facility investment this year, up from 23 trillion won recorded for capital spending in 2011.

Out of the planned total, the tech giant said it plans to spend 15 trillion won on its chip business and 6.6 trillion won on its display panel division.

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Source: Yonhap News (Jan. 27, 2012)

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