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SEOUL, South Korea (AP) — Samsung Electronics Co. said quarterly profit soared 76 percent, boosted by the popularity of its Galaxy smartphones, which outsold the iPhone for a fourth straight quarter.

But the company said Friday it expects earnings to decline during the current quarter because of seasonally low demand for consumer electronics. It is also leaving its 2013 capital expenditure at the same level as last year at 23 trillion won ($21.5 billion), underlining uncertainty about the global economy and declining demand for personal computers.

The strong South Korean won is also becoming a negative for Samsung. It expects more than 3 trillion won will be shaved from its 2013 operating profit due to the stronger local currency. Samsung’s shares fell as much as 3 percent after earnings release.

Net profit for the final quarter of 2012 totaled 7.04 trillion won ($6.6 billion), a 76 percent surge from 4.01 trillion won a year earlier. Analysts had expected 6.95 trillion won in net profit, according to financial information provider FactSet. Sales rose 19 percent over a year earlier to 56.06 trillion won and operating income jumped 89 percent to 8.84 trillion won.

Increased sales of smartphones were the key source of its profit growth. Samsung, which overtook Apple Inc. as the top smartphone maker last year, said its operating profit from the division that makes and sells smartphones and tablets more than doubled to 5.44 trillion won in the fourth quarter, from 2.56 trillion won a year earlier.

Most analysts believe the Suwon, South Korea-based Samsung shipped more than 60 million smartphones, including the Galaxy S III and Galaxy Note II, during the three months ending in December, which would put the year’s smartphone sales at more than 200 million. Apple said it sold 47.8 million iPhones in the quarter.

Hong Kong-based research firm Counterpoint Research said Samsung took 33 percent market share in the fourth quarter, compared with Apple’s 21 percent. Another market researcher IDC put Samsung’s share at 29 percent versus Apple’s 22 percent.

The company’s component divisions that make semiconductor products and display panels also benefited from a rise in demand for smartphones. Sales of mobile processors that power popular devices such as Apple’s iPhones and Samsung’s own Galaxy smartphones boosted the bottom line.

The recovery in the display panel division was also led by strong sales of advanced mobile-phone screens called OLED, which are mostly found in high-end Samsung smartphones. The display division posted 1.11 trillion won in profit compared with a small loss a year earlier.

Analysts said Samsung will likely see a continued rise in smartphone sales this year, especially in low- and mid-priced models where it doesn’t face competition from Apple. Some analysts, including Young Park at Woori Securities, forecast Samsung smartphone shipments to rise as much as 50 percent this year from 2012 to over 300 million units.

Samsung executives said during the conference call with investors that smartphone demand will ease in the current quarter without giving guidance for the company’s performance. But analysts said that Samsung could be little affected by market demand thanks to its variety of products that range from affordable to expensive devices.

“Even though they said demand for smartphone will slow down in the first quarter, Samsung will likely buck the industry trend and its own smartphone sales will go up,” said Byun Han-joon, an analyst at KB Investment Securities.

Apple, which keeps its iPhone price high, might see iPhone sales plateau in coming years as more consumers snap up cheaper Android phones.

Still, Apple’s business has been more profitable because of the high price of the iPhone, which generates a larger profit per sales. Samsung, which makes dozens of handset models a year and customizes them for mobile operators, also sells cheaper smartphones and spends about three times more on expenses such as marketing and advertising costs to promote its Galaxy brand phones and televisions.

Counterpoint Research estimates Apple, though it sold fewer handsets than Samsung, took 70 percent of profit in the handset market during the fourth quarter, while the South Korean rival claimed 25 percent.

Samsung is expected to introduce a new flagship smartphone in its Galaxy S series as early as April, which analysts say will shore up its bottom line. The company said consumers seeking to replace its current handset and get a faster wireless connection through LTE networks will drive the demand for new models, easing concerns that sales would slow because of high rates of smartphone use in developed markets. Part of its strategy to command higher prices from consumers has been adding new hardware features, such as a digital pen in the Galaxy Note series.

Samsung’s flexible display technology, which allows tablet computers to fold into mobile phones or bend the edge of the screen, is an effort to make its products stand out from others and to shore up its profit. But such technology, which was shown in public earlier this month in Las Vegas, will still need more time for mass production.

Samsung said its profit will be hurt by unfavorable foreign exchange rates this year. Robert Yi, head of Samsung’s investor relations, said the negative impact from the foreign exchange rates will exceed 3 trillion won ($2.8 billion), with the loss largely coming from the firm’s exposure to the euro.

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Article source: http://www.nytimes.com/aponline/2013/01/24/business/ap-as-skorea-earns-samsung-electronics.html?partner=rss&emc=rss

Japan’s nuclear safety agency raised the severity of the Fukushima Daiichi nuclear plant incident by two notches to level 7, the highest on the scale and the same rating as the Chernobyl incident in 1986. The move, along with continuing earthquake aftershocks which have interfered with recovery work, sent ripples of unease through markets.

“It means slower growing coming out of Japan in the short term, and that’s going to weigh on global growth,” said Peter Cardillo, chief market economist at Avalon Partners Inc.

Japan’s Nikkei 225 index fell 1.7 percent. The British FTSE 100 index, French CAC-40 index and German DAX index all dropped 1.4 percent or more.

On Wall Street, the Dow Jones industrial average was down 119.35 points, or 1 percent, while the broader Standard Poor’s 500-stock index lost 11.76 points, or 0.9 percent. The technology heavy Nasdaq lost 26.96 points, or 1 percent.

The energy industry fell the most of the 10 sectors that make up the S. P. 500 index. It dropped 3.5 percent, more than double the percentage loss of any other group, after oil prices fell 3.7 percent to $105.91 a barrel. Goldman Sachs, which had been bullish on oil prices, surprised the market with a report early Tuesday saying it now expects a “substantial pullback.”

Alcoa started earnings season late Monday by saying it returned to a first-quarter profit. But it also said its revenue grew to just $5.96 billion from $4.89 billion. Analysts expected bigger growth, to $6.16 billion, according to FactSet. Alcoa’s stock dropped 5.2 percent in early trading.

The aluminum company was the first blue-chip to report first-quarter results, and analysts are expecting to see revenue growth from companies over all. Much of the earnings growth so far this recovery has come from cutting jobs and other costs, rather than from demand growth.

Other big companies reporting results this week include JPMorgan Chase, Google and Bank of America.

In other news, the Commerce Department said the trade deficit fell 2.6 percent to $45.8 billion in February, after the country imported less oil and fewer automobiles.

Investors are also concerned that the global recovery is slowing amid high oil prices, as illustrated by economic figures out of Britain and Germany. The International Monetary Fund also downgraded its 2011 growth forecast for the United States, Japan and Britain — three of the world’s top seven industrial countries — largely because of higher oil prices.

In the bond market, debt-heavy Greece managed to borrow 1.62 billion euros ($2.34 billion) in short-term loans at an interest rate that was marginally higher than in a similar debt auction last month.

The auction of 26-week bills had an interest rate of 4.8 percent, slightly above the 4.75 percent at a similar sale in March, Greece’s public debt management agency said.

The agency had originally been seeking to raise 1.25 billion euros, but borrowed more as investor interest was strong — the auction was 3.81 times oversubscribed, compared with 3.59 times in March.

As Athens struggles with its tough savings goals, the president of the European Union, Herman Van Rompuy, warned that Greece had no option but to stick with its long-overdue economic overhaul.

“The key is to continue implementing the courageous reforms and privatizations that have been agreed in a timely and effective manner,” Mr. Van Rompuy told reporters after talks in Athens with the Greek prime minister, George Papandreou. “On fiscal consolidation it is important to stick to the program objectives.”

Article source: http://www.nytimes.com/2011/04/13/business/13markets.html?partner=rss&emc=rss

Samsung Profit Tops Forecasts, Helped by Galaxy Sales

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