Galaxy smartphones power Samsung to post $7.3 billion profit

Telecom Lead Asia: Galaxy smartphones has contributed significantly to Samsung Electronics’ $7.3 billion profit in quarter ended September 2012.

Samsung on Friday said it posted strong sales of high-end TVs and Galaxy smartphones.

The Korean devices major is reaping benefits despite pressure from Apple tablets and smartphones.

Samsung may have spent around $2.7 billion on marketing in July-September alone around the London Olympic Games and new Galaxy promotions, according to Credit Suisse.

Analysts say Samsung’s mobile communications business that sells smartphones, media players and tablet computers generated almost 70 percent of its operating profit in the last quarter.

Its growth has been driven by runaway demand for Samsung’s Android-powered smartphones that outweighed weak orders for memory chips and thin margins in television sales. Samsung surpassed Apple and Nokia in annual smartphone sales for the first time in 2011, according to Strategy Analytics.

Analysts cautioned that next quarter may not be better for Samsung. The devices company may need to set money aside this quarter if it fails in an appeal to overturn an August 24 U.S. court verdict that awarded more than $1 billion in damages to Apple for patent infringements by Samsung.

Profit at Samsung’s mobile division is likely to have more than doubled in July-September to around 5 trillion won – around two thirds of total group profit – as smartphone shipments topped 58 million, including up to 20 million Galaxy S IIIs, Reuters reported.

Samsung estimated its July-September operating profit grew 91 percent to 8.1 trillion won from a year ago. The company estimated its third-quarter revenue at 52 trillion won, in line with forecasts.

Strong handset sales made up for reduced profits from its chip business, as prices of its dynamic random access memory (DRAM) chips, used in computers and mobiles, dropped 14 percent in the September quarter. DRAM chips now trade below what it costs most contract manufacturers to make them, and will squeeze near-term earnings, analysts say. Tablets and smartphones, the real growth areas, use far smaller memory storage.

Samsung’s mobile division chief JK Shin last week predicted Note II sales could be three times higher than those of its predecessor model in the three months after launch – suggesting sales of around 10 million devices by the end of this year.

Nomura Securities estimates Samsung sold 60 million smartphones in the three months ended Sept. 30, including 18 million of the Galaxy S III. That is above 50 million smartphones that Samsung is believed to have sold in April-June.

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