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Samsung Electronics may post first profit growth in two years, but it wasn't Galaxy S6 sales that did it

Posted: , by Luis D.

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Samsung Electronics may post first profit growth in two years, but it wasn't Galaxy S6 sales that did it

It looks like Samsung Electronics is about to unveil some financial results for the third quarter (starting July, ending September) soon, which is always a point of interest in the Android smartphone realm, as Samsung is the biggest player in the business. As it's the way it goes, early forecasts are already up, and they happen to be optimistic! Polling five analysts, Wall Street Journal came up with an earnings forecast of $5.3 billion (6 trillion Korean won), representing an approximate 42% increase over year. Interim, revenue is expected to total $44 billion (50 trillion won), which is up 7.5% from a year ago, according to estimates. This analyst poll corresponds with Samsung's official Q3 earnings guidance, released early October, and should be very close to the final numbers that are about to come up.

This doesn't sound quite like a Samsung Electronics forecast from the past year or two, right? Falling smartphone prices, aggressive competition from Chinese brands, and a sales slowdown due to market saturation landed a huge blow at its smartphone profits. But here we are, expecting the company's first year over year profits increase in seven straight quarters of decline! That's good news, yet surprisingly, it wasn't solely the warmly received Samsung Galaxy S6, S6 edge, Note5, and S6 edge+; or the attractively positioned A-series of upper mid-range handsets that turned its fortunes around.

Samsung Electronics definitely had an upbeat quarter.

Rather, it may have been two things, in particular. First, Samsung Electronics reduced the intervals between its high-profile smartphone releases, outing the Galaxy Note5 and Galaxy S6 edge+ a good month before Apple pushed the iPhone 6s and 6s Plus. This strategy may have helped the company preserve its market share by not letting its main smartphone rival whisk attention immediately. In the past, Galaxy Note announcements occuried in early September, during the IFA Conference in Berlin, only to be followed by Apple's keynotes days later. In this line of thought, analysts expect an unusually early January reveal for Samsung's next flagship smartphone, the Galaxy S7. It is said that suppliers will begin mass-producing components for the device this December. In addition, Samsung Pay, the company's mobile payments system, will back a strategy of attracting and locking in users to its devices. The system is operational in South Korea and America, with users in Korea numbering 1 million.

Second, Samsung Electronics has a huge semiconductor operation whose steady profits make up for the sustained losses in its smartphone business. Analysts note that "solid demand" for memory chips and other semiconductor components used in smartphones, along with "a cyclical upswing" in prices, led to growth that now accounts for half of Samsung Electronics' profits! However, this doesn't mean the semiconductor business is a safe haven, for researchers at Gartner project a 17% revenue decline next year, due to "potential oversupply" in the DRAM memory market. However, Samsung's chipmaking division does have its work cut out for it, having secured Apple and Qualcomm as manufacturing clients for present and upcoming 14nm application processors.

With these things into account, Samsung Electronics turning a profit seems like a small, well-earned celebration before a potentially hard year ahead. But considering how difficult the Android smartphone market has become in general, the company definitely had an upbeat quarter.


source: Wall Street Journal

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posted on 28 Oct 2015, 07:08 12

5. imnotascammer (Posts: 160; Member since: 22 Aug 2012)


"it wasn't the warmly received Samsung Galaxy S6, S6 edge, Note5, and S6 edge+; or the attractively positioned A-series of upper mid-range handsets that turned its fortunes around."

But it is. Give credit to where it is due. Go look at the first argument:

"Samsung Electronics reduced the intervals between its high-profile smartphone releases, outing the Galaxy Note5 and Galaxy S6 edge+ a good month before Apple pushed the iPhone 6s and 6s Plus. This strategy may have helped the company preserve its market share by not letting its main smartphone rival whisk attention immediately"

posted on 28 Oct 2015, 07:09 9

6. ajac09 (Posts: 1482; Member since: 30 Sep 2009)


omg I received a warning from iphonearena my life is over the one thing that matters in life is gone LOL. They get mad so easily when they are called out on their garbage articles.

posted on 28 Oct 2015, 07:24 1

9. Neros (Posts: 1016; Member since: 19 Dec 2014)


What did you write that got them upset?

posted on 28 Oct 2015, 07:52

13. Commentator (Posts: 3722; Member since: 16 Aug 2011)


Nice try!

posted on 28 Oct 2015, 07:57 4

15. shnibz (Posts: 385; Member since: 18 Sep 2011)


If they are so bad, then why are you here?

posted on 28 Oct 2015, 14:21

48. MrElectrifyer (banned) (Posts: 3960; Member since: 21 Oct 2014)


Perhaps to inform others of the new lows iphonearena is reaching? In which case, he didn't do much of a good job yet :p

posted on 28 Oct 2015, 07:15 3

7. hanabi (Posts: 177; Member since: 08 Oct 2015)


In one quarter,

$11B profit from Apple

$5B profit from Samsung electronics,

LG electronics $0.2B :'(

posted on 28 Oct 2015, 10:41 8

40. TechieXP1969 (Posts: 14041; Member since: 25 Sep 2013)


Apple - Doesn't manufacturer any of the componenets in their phone, they dont have 100,000 employees working in a factory, they don't make a damn thing. Apple's R&D budget was less than $1M. They outsource everything except the phones design. Everyone knows paying someone to do your stuff is far cheaper than doing it yourself.

Samsung - makes all their own phones, makes 90% of the parts that go int them. In fact they make everythign but the cameras and internal storage, Samsung Electronics has over 250,000 employees making their stuff, distributing their stuff to more countries, they make far more stuff outside of phones, as they make displays, chipsets and appliances and TV's. Samsung has 10 times the overhead Apple does and still manage to sell twice as many phones and make 1/2 the same profit. Samsung as stated as fact spent over $14B in R&D for multiple products that they actually make.

You comparisons stupid because Samsung and Apple are to different companies who don't have the same business model.

And yes Apple makes all that money, but what you got in return. iOS7,8 and 9 the worse versiosn of iOS. Even Microsoft never had 3 bad versions of Windows in a row. Buggy, crashy, laggy, bending phones. It took Apple phone bemnding for them to use better stuff on the next model. Samsung did this automatically in-house because they do far better phoen testing. Apple releases you sh!t, and then tries to fix it later. Samsung chose to not sell you sh!t. While the other OEM's sold phones with a defective Qualcomm SnapDragon 810, Samsung chose not to use it and had to make their own at the last minute which cost them money. But save them more money as their phones have had no issues compared to everyone else.

While Apple chose to buy cheap 128GB flash storage that was defective, and cause huge failures in the iPhone 6 Plus the the Air 2. My wife's Air 2 was replaced twice for that issue. The first time I went to the Apple store, they tried to give me a refurb. I said, I paid $800 for this piece of crap only 3 weeks ago, you are gong to replace it with a brand new in box or you are giving me a refund.

So yea you keep buying those overpriced chinese made piece of junk with all its problems. The best they could so for the iPhone 6S, was using the exact same design, add a ugly color, and give Force Touch which is junk vs increasing the storage, making the battery bigger or increasing the resolution of the display.

Yet Samsung makes a brand new looking Galaxy S and Note EVERY YEAR. They add reasonable changes to ALL their phones. Not selling the same camera in a phone for 5 years to save money.

Samsung spent money to deal with complaints and to make their products more attractive and better. Apple spent zero, and their products show this. Same crap shoved into the basic same design over and over and yet dummies keep buying them like idiots and you want to diss the company actually bringing innovation? You're ignorant!

posted on 28 Oct 2015, 10:53 5

42. Leo999 (Posts: 25; Member since: 15 Feb 2015)


Apple's R&D budget was 8.1B in Fiscal 2015 (up ~40% Y/Y), check your facts. 1.89B in Q1, 1.91B Q2, 2.0B Q3, 2.25B Q4. Apple should easily spend more than 10B in R&D in less than 2 years.

The rest of your post came from Samsung PR.

posted on 28 Oct 2015, 19:18

51. TechieXP1969 (Posts: 14041; Member since: 25 Sep 2013)


I know it is...but compared to what Samsung spends, what Apple spends is nothing.

What Apples calls R&D is buying another company. Sounds like ruin and destroy. Show me what products Apple has that has seen any major changes that shownthe h spent this?

Nothing. The Mac, same typical speed bumps and no relation changes in looks. They wasted money on that trashcan hich everyone talked about for a couple weeks and you heard nothing afterwards.

The iPhone 6S has the same design with a heavier grade of aluminum with cpu speed bump anD a force touch display which they bought, not engineer or make.

Apples R&D like I said is buying another company and claiming the tech is their own. People probably actually think Apple made their fingerprint touch sensor and force touch. They bought them. Samsung actually made their own.

Buying another company for their hard work in research and development is not equal to doing your own.

Also when I said Apple spend 1M it's obviously it was an off th top of my head umber vs an exact figure. The point was to show Samsung g spends far more on such anD it shows in their product...period.

posted on 29 Oct 2015, 05:33

57. Leo999 (Posts: 25; Member since: 15 Feb 2015)


Acquisitions are not part of R&D budget lol.

Samsung's R&D Budget is now just 1.79x Apple's budget (14.5 vs 8.1). It was 3-4 times larger just a few years ago and most likely Apple will spend more than Samsung in 5 years. Why? Because Apple is now a much bigger company; bigger by far in terms of reveneus, profits, assets, market cap, cash and brand, and Apple will need to ramp un spending to enter the car market.

You should also remember that samsung has a Semiconductor division, a display division and 20 times the number of products on the market (50+ phones, fridges, refrigerators and a lot of other things). That's why Samsung has to spend so much.

posted on 28 Oct 2015, 11:10 3

44. Ninetysix (Posts: 2621; Member since: 08 Oct 2012)


1M R&D? Really?

http://www.fool.com/investing/general/2015/06/14/5-tech-companies-spending-more-on-rd-than-apple-in.aspx

Where are you coming up with all these BS brosephine?

posted on 28 Oct 2015, 11:17 1

45. Leo999 (Posts: 25; Member since: 15 Feb 2015)


And that was last year. Apple is ramping up R&D spending faster than anyone.

Just Google " Apple Research and Development Expense (Quarterly) " (yahoo finance).

posted on 28 Oct 2015, 19:20

53. TechieXP1969 (Posts: 14041; Member since: 25 Sep 2013)


It's obvious it wasn't meant to be an exact number, it was a point of reference to show how compared to what Sumsung spends vs Apple, the result how in all of Samsung products.

posted on 28 Oct 2015, 07:32 14

10. Shocky (unregistered)


Confused, Samsung have been making money for years, mobile division especially.

This article makes it sound like they've been losing money, slightly declining profits is completely different to losing money Phonearena.

The fact is Samsung is a diverse company

posted on 28 Oct 2015, 07:42

11. Supraman21 (Posts: 390; Member since: 09 Jun 2010)


Nobody makes a lot of money with android

posted on 28 Oct 2015, 07:51 3

12. DBounce (Posts: 157; Member since: 26 Apr 2014)


5 Billion a quarter not a lot? Apple is the biggest company on earth and managed 11 billion. I think 5 billion is plenty.

posted on 28 Oct 2015, 08:02 7

16. Hexa-core (banned) (Posts: 2131; Member since: 11 Aug 2015)


Apple isn't the biggest company on earth.
go get a clue. *meh*

posted on 28 Oct 2015, 08:19 2

20. Leo999 (Posts: 25; Member since: 15 Feb 2015)


Apple is the most profitable company right now, yeah (~54B profit / year).

posted on 28 Oct 2015, 08:43 5

24. j2001m (Posts: 3004; Member since: 28 Apr 2014)


The thing is Apple does nothing with its 11billion, why Samsung does something with its 5 billion and that why I try to buy Samsung where I can as they alway try to give best hardware for your cash even if it cost them some cash to do so

posted on 28 Oct 2015, 09:23 3

31. Supraman21 (Posts: 390; Member since: 09 Jun 2010)


It was sarcasm lol. I don't think you understood my joke

posted on 28 Oct 2015, 09:43 1

34. Shocky (unregistered)


5 Billion in a quarter is a lot of money mate.

posted on 28 Oct 2015, 07:56 11

14. wando77 (Posts: 1076; Member since: 23 Aug 2012)


5 billion in a quarter is more than all the people that visit this site will earn combined in their lifetimes

posted on 28 Oct 2015, 08:05

17. Hexa-core (banned) (Posts: 2131; Member since: 11 Aug 2015)


And who are you to make such prediction? Do you employ all those who visit this site? Do you hold thier destiny? Stop your ludicrous crap talk and try being reasonable.

posted on 28 Oct 2015, 08:18 11

19. androidwindows (Posts: 208; Member since: 04 Oct 2014)


He's just trying to make a point and he's probably right.

posted on 28 Oct 2015, 08:33 2

23. Commentator (Posts: 3722; Member since: 16 Aug 2011)


He's trying but I'm not sure what the point is.

Oh, probably that we, the internet commenters, have pretty much no insight into the workings of a multi-billion dollar tech conglomerate, and thus while our judgments and proclamations do wonders for our self-esteem, they probably have absolutely no meaning.

posted on 28 Oct 2015, 08:51 2

26. Cicero (Posts: 922; Member since: 22 Jan 2014)


You are wrong. Bill Gates is among us! LOL

posted on 28 Oct 2015, 09:58

35. Shocky (unregistered)


One of the Lumia fanboys no doubt.

posted on 28 Oct 2015, 08:32 2

22. sissy246 (Posts: 3873; Member since: 04 Mar 2015)


Get up on the wrong side of the bed today.
I agree , he is just making a point. I also agree that he is probably right.

posted on 28 Oct 2015, 08:49

25. Hexa-core (banned) (Posts: 2131; Member since: 11 Aug 2015)


those who created these famous social websites have made much more than that.
So there's no point in such pointless statement.

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