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Profit at Samsung Disappoints

July 5, 2013 by Leave a Comment

A slowdown in the sales growth of high-end smartphones has spread from Apple to its main rival, Samsung Electronics.

Samsung, the world’s biggest provider of mobile phones and semiconductors, said Friday that it expected to post an operating profit of 9.5 trillion won, or $8.3 billion, in the second quarter of the year, a 47 percent rise from a year earlier.

While many companies would envy such a growth rate, the forecast disappointed financial analysts, who had, on average, expected Samsung to post an operating profit of more than 10 trillion won in the April to June quarter.

While sales of smartphones continue to gain, the rate of increase for premium-priced devices like Samsung’s flagship line, the Galaxy S4, and Apple’s iPhone has been easing in recent months. Meanwhile, rival smartphone producers like Sony and HTC have mounted a renewed challenge with their latest handsets, increasing pressure on the two market leaders.

Analysts say much of the growth in smartphone sales in coming years will be at the lower end of the market, where Chinese manufacturers are gaining share. As smartphones become increasingly commoditized, prices will fall and profit margins will shrink.

“The concern is the future of the smartphone market, which is already saturated at the high end,’’ said C.W. Chung, an analyst at Nomura Securities. “The smartphone industry may be becoming more like the PC industry,” in which different manufacturers struggle to differentiate their products and consumers mostly buy based on price.

In April, Apple reported its first decline in earnings in a decade, as demand for iPhones eased from the torrid levels of the last few years.

A month earlier, in March, Samsung had introduced the Galaxy S4 amid considerable fanfare at an event at Radio City Music Hall in New York. While the new model has sold well, it has not performed as strongly as some analysts had expected. Meanwhile, the cost of all that marketing hype has eaten into profit margins.

Even before the news Friday, some analysts had been downgrading their sales and profit forecasts for Samsung. Meanwhile, investors have been punishing the stock prices of both Apple and Samsung. Shares of Apple have fallen by about 21 percent since the start of the year, while Samsung is down about 17 percent.

Mark Newman, an analyst at Sanford C. Bernstein in Hong Kong, said investors had become too pessimistic about Samsung, adding that he thought its profit margins would rebound in the second half of the year.

“At current valuations, the market is assuming the mobile business will destroy value going forward,” he wrote in a note to clients. “We believe Samsung is cheaper than ever and provides an extremely attractive entry point.”

Samsung is scheduled to post its official earnings report for the second quarter on July 26.

Even if smartphone profit margins fall and Samsung faces greater pressure from rivals, it could benefit in another way, because it is the biggest producer of the semiconductors used in smartphones and other computing devices. Prices of memory chips have been rising in recent months after a long slump.

While Samsung is also the world’s largest television producer, profit margins in that business have been squeezed by fierce competition. So Samsung remains highly dependent on its mobile division, which delivered three-quarters of the company’s operating profit in the first quarter.

The Galaxy S4 has actually gotten off to a quicker start than its predecessor model, the S3. It took the S4 only 60 days to sell 20 million handsets, compared with 100 days for the S3.

Samsung’s overall estimated revenue also grew strongly in the second quarter, rising by 20 percent, to 57 trillion won. But that, too, was slightly below analysts’ expectations.

“With Samsung, the market had gotten used to upside surprises,’’ Mr. Chung of Nomura said. “But the previous quarters were abnormal. People need to adjust their focus.”

Article source: http://www.nytimes.com/2013/07/06/business/global/samsung-earnings.html?partner=rss&emc=rss

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Daimler Abandons Forecast Amid Dismal Market

April 24, 2013 by Leave a Comment

PARIS — Daimler, the maker of Mercedes-Benz cars, said Wednesday that it was abandoning its 2013 profit forecast in the face of a dismal European market.

The company, which is based in Stuttgart and also makes buses and trucks, said it expected demand in Western Europe to continue hovering “around a 20-year low” this year. “The German market,” it added, “cannot detach itself from this development and is expected to fall significantly short of the previous year’s level.”

The carmaker said it still expected group revenue to rise this year. But even operating from the assumption that the second half of the year would be better than the first, it said it no longer believed it would be able to match its 2012 operating profit of about €8.1 billion, or $10.5 billion.

Despite poor sales in Europe, Ford Motor said Wednesday that its net profit climbed 15 percent in the first quarter, to $1.6 billion, as record results in North America compensated for losses in Europe and South America.

The company reported a pretax loss of $462 million in Europe, about triple the $149 million it lost in the region in the first quarter of 2012.

Ford has said it expected a loss of up to $2 billion this year in Europe, where weak economic conditions have driven new vehicle sales to their lowest level in decades.

The company is closing a major assembly plant in Belgium and accelerating other cost cuts in Europe. It said the “outlook for the business environment in Europe remains uncertain.”

Results in Asia, where Ford is investing heavily in new factories and products, improved slightly. The company said it had a pretax profit of $6 million in the region compared with a $95 million loss a year earlier.

Car sales in the European Union totaled just under three million units in the January-March period, down 9.8 percent from the period a year earlier. Last week, the European Automobile Manufacturers’ Association described that as the worst start to a year since it began collecting the data in 1990.

In Germany, sales fell 17.1 percent last month, and the luxury segment, which long escaped the worst of the downturn, is now shrinking as well. In another worrying sign, recent data have shown the German economy, the largest in Europe, losing steam, meaning things may get worse.

European automakers may also find themselves competing at a disadvantage against Toyota, Nissan and Honda, after the Bank of Japan began a campaign to end deflation that has driven down the yen and made vehicles built in Japan relatively less expensive in other markets.

Daimler said its quarterly net profit slid 60 percent from a year earlier, to €564 million. Its earnings before interest and taxes, a measure favored by analysts, fell 56 percent, to €917 million, lower than the most pessimistic forecast in a Reuters survey of analysts. Revenue fell 3 percent, to €26.1 billion.

Daimler had warned this month that it was reassessing its forecasts, raising expectations that its rivals might follow suit. But that caution was not mirrored at Volkswagen, the largest European automaker, which said Wednesday that it planned to meet expectations, holding operating profit steady in 2013.

Despite the difficult market, “we remain confident overall that we can pick up speed over the rest of the year,” Martin Winterkorn, the VW chairman, said in a statement. Volkswagen, based in Wolfsburg, Germany, reports its first-quarter results on Monday.

In Paris, PSA Peugeot Citroën said its first-quarter auto sales fell 10.3 percent, outpacing the European market decline. The French company does not report profit or loss on a quarterly basis.

Peugeot, the second-largest European automaker, relies heavily on the Continent for its sales. It said Wednesday that its efforts to expand in China had paid off well in the first quarter, as its unit sales there increased 31 percent.

Bill Vlasic contributed reporting from Detroit.

Article source: http://www.nytimes.com/2013/04/25/business/global/daimler-abandons-forecast-amid-dismal-market.html?partner=rss&emc=rss

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Nokia Trims Loss but Sales Fall

April 18, 2013 by Leave a Comment

Shares in Nokia, the former cellphone market leader which has tied its future to a smartphone collaboration with Microsoft, fell as much as 6 percent in Helsinki after the company reported a 20 percent decline in quarterly sales, to €5.9 billion, or $7.7 billion.

Nokia trimmed its quarterly loss to €272 million from €978 million a year earlier, and increased sales of its flagship Lumia Windows smartphones by 27 percent. Investors, however, focused on a weakness in sales of basic cellphones, which still makes up the bulk of Nokia’s business.

“Nokia has been a very jittery stock, and that is going to continue,” said Benedict Evans, an analyst at Enders Analysis in London. “The problem is that there is still some uncertainty about whether the company’s survival strategy will work, and the market is seizing on any evidence of success or a setback.”

Two years into Nokia’s smartphone collaboration with Microsoft, the Finnish company is steadily building sales of the Lumia line, but those gains have not offset the erosion in sales of its basic models. Nokia sold 55.8 million simple cellphones in the quarter, down from 70.8 million a year earlier, the lowest level in more than a decade, Mr. Evans said.

Stephen Elop, the Nokia chief executive, said concerns about the strength of the company’s turnaround were overstated, noting that Nokia’s financial results, and its smartphone business, showed continued signs of improvement.

“Yes, there are challenges, but we are actually pleased with the progress made so far,” Mr. Elop said in an interview.

With its latest results, Nokia has posted an operating profit in three consecutive quarters, Mr. Elop said. The expansion of the Lumia line bodes well for the future, which will increasingly be shaped by the smartphone business. In the first quarter, Nokia sold 5.6 million Lumia phones, up from 4.4 million in the fourth quarter.

The average selling price of a Nokia smartphone rose 34 percent in the quarter to €191.

In a conference call with investors, Mr. Elop, a former Microsoft executive, said he expected the rate of growth in Nokia’s smartphone sales to accelerate in the second quarter, with the pending introduction of a new model in the United States. Mr. Elop said Nokia planned to begin selling a new Lumia phone this month with a top U.S. operator, which he did not identify.

Carolina Milanesi, an analyst with Gartner in San Jose, California, said the unidentified provider was Verizon Wireless and that it would sell a top-of-the-line Lumia handset.

“This phone is going to have a major positive impact on Nokia because Verizon Wireless is the market leader,” Ms. Milanesi said. “This will significantly boost U.S. distribution.”

Nokia already sells co-branded Lumia phones through ATT and T-Mobile USA.

The Finnish company is also taking steps to shore up its basic cellphone business, Mr. Elop said. That part of the business has been shrinking as one in two global consumers of mobile phones buy smart devices, and low-cost Asian rivals, like MediaTek, are flooding China and India, two of Nokia’s traditionally strongest markets, with $20 cellphones.

Ms. Milanesi, the Gartner analyst, said she believes that Nokia’s turnaround is on track.

“Sure, Nokia needs to deliver improvements,” Ms Milanesi said. “But they need to do that profitably, which they are doing. This business won’t get turned around in a quarter. But it is moving in the right direction.”

Article source: http://www.nytimes.com/2013/04/19/technology/nokia-trims-its-loss-as-expected.html?partner=rss&emc=rss

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DealBook: Xstrata Board Supports Glencore’s Revised Offer

October 1, 2012 by Leave a Comment

5:13 a.m. | Updated

The board of the mining company Xstrata announced on Monday that it was backing a revised takeover bid from the commodities trader Glencore International, putting the $90 billion merger back on track.

To sidestep shareholder opposition to executive bonuses worth potentially more than $200 million, Xstrata will now ask investors to support the deal even if they do not agree with the proposed incentive plan.

The change comes after Glencore raised its takeover bid in September, offering 3.05 of its shares for each Xstrata share.

In exchange, however, Glencore had proposed that its chief executive, Ivan Glasenberg, should take over the unified company six months after the merger was completed. Under the original terms of the deal, Xstrata’s chief, Mick Davis, and his management team were set to retain control.

Xstrata confirmed on Monday that Mr. Davis, who will now not participate in the proposed executive incentive plan, would step down from his post after six months if the merger was approved, though Xstrata would still retain a majority of the combined group’s board seats.

The changes in the new offer raised the possibility that top mining executives would depart, leaving the combined company without veteran leaders in its core business. Mining is expected to account for 84 percent of the unified company’s operating profit, based on last year’s earnings.

A major hurdle to winning shareholder support has been bonuses that Glencore and Xstrata had been negotiating to retain top executives. The payouts — worth more than $200 million — have angered several major shareholders.

Some institutional investors, including BlackRock and Legal and General, have been said to oppose the retention payments as too extravagant. That has prompted Xstrata to revise the bonus packages to more closely link them to performance targets, though they remain basically the same size.

In a vote to be put to Xstrata shareholders in November, the company will now offer investors three options when deciding on the deal.

Shareholders can vote in favor of both the merger and the retention bonuses, back the proposed combined group without supporting the incentive plan or oppose the merger altogether.

Xstrata’s board has recommended that shareholders support both the merger and incentive plan.

A vote on the merger will need the support of at least 75 percent of Xstrata’s eligible shareholders to pass, while a decision on the retention bonuses will only need the backing of 50 percent of investors.

“We have decided to decouple the resolutions to approve the merger from the resolution to approve the revised management incentive arrangements,” Xstrata’s chairman, John Bond, said in a statement on Monday. “This will enable shareholders to vote in line with their convictions.”

Shares in Xstrata rose 3.1 percent in morning trading in London on Monday, while stock in Glencore fell less than 1 percent.

The decision by Xstrata’s directors to proceed with their recommendation keeps afloat a merger that would create a behemoth in the world of mining and minerals.

The proposed transaction, first announced in February, would unite Glencore, a giant commodities trading house, with Xstrata, its longtime mining partner.

Together, the two would create an international mining company with significant physical assets and an enormous trading operation that has invaluable insights into global demand for minerals.

The talks have drawn in many of London’s top deal makers, generating big fees for the bankers involved if the transaction is approved. Citigroup and Morgan Stanley are advising Glencore, while Deutsche Bank, JPMorgan Chase, Goldman Sachs and Nomura are advising Xstrata.

But the talks have been bogged down for months over questions about who would lead the combined company and how much it would cost to retain important Xstrata executives.

One wild card remains: the sovereign wealth fund Qatar Holding.

The fund, the second-biggest shareholder in Xstrata after Glencore, has kept silent on the revised takeover bid. An adviser to Xstrata said previously that the fund was less concerned about the payouts than about retaining top company executives. A spokeswoman for Qatar Holding declined to comment on Monday.

With its 12 percent stake, Qatar Holding is seen as a crucial component to winning approval of any deal. The sovereign wealth fund has said it will wait until Xstrata makes its announcement before making its own decision.

“The key risk of a deal failure rests once again with Qatar Holding,” Ash Lazenby, an analyst at Liberum Capital in London, wrote in a note to investors on Monday, adding that the proposed merger might still fail if the Middle Eastern sovereign wealth fund did not support the executive incentive plan.

A version of this article appeared in print on 10/01/2012, on page B3 of the NewYork edition with the headline: A Merger In Mining Said to Be On Track.

Article source: http://dealbook.nytimes.com/2012/09/30/xstrata-board-said-to-support-glencores-revised-offer/?partner=rss&emc=rss

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The New York Times Company Reports a Profit

October 20, 2011 by Leave a Comment

The company, which reported its earnings for July through September on Thursday, posted a profit of $15.7 million, compared with a loss of $4.3 million during the third quarter last year. That translated to earnings of 10 cents a diluted share versus a loss of 3 cents a share a year ago.

Costs decreased during the quarter, falling 3.6 percent to $504.2 million. Circulation revenue grew by 3.4 percent to $237 million.

Total advertising revenue, meanwhile, slipped 8.8 percent, to $262 million, as national and classified advertising and the company’s About.com group proved particularly weak. Revenue in every advertising category was down, a sign of the challenges the industry faces in a stagnant economy.

The company benefited from a $65.3 million pre-tax gain from the sale of part of its stake in the Fenway Sports Group, which owns the Boston Red Sox. It also recorded a $46.4 million charge related to a repayment of the $250 million it borrowed from Mexican billionaire Carlos Slim Helú. The repayment in August came three and a half years before it was due.

“Despite a challenging advertising environment, our operating profit grew,” said Janet L. Robinson, president and chief executive officer of the Times Company. “These results highlight the strength of The Times brand and its ability to further monetize its world-class news, analysis and commentary.”

Operating profit for the quarter was $33 million, compared with $9 million a year ago. Excluding special items, operating profit grew 5.5 percent, to $65.5 million. 

The Times now has 324,000 paid subscribers to the various digital editions of the paper, including e-readers and its Web site, compared with 281,000 at the end of the second quarter. Those figures do not include the 100,000 users who receive access to NYTimes.com free through a sponsorship by the Ford Motor Company.

The Times said that about 800,000 home delivery customers had linked their accounts to NYTimes.com and now receive access free. New orders for print subscriptions continued to increase, the company said, a rise it attributed to the free Web access that accompanies the subscriptions.

(The Boston Globe just began charging users of its Web site, so those results were not reflected in the third quarter.)

Digital advertising revenue at the company’s News Media Group, which includes the newspaper businesses, increased 6.2 percent to $50.3 million, a slower rate of increase than in previous quarters, which the company attributed to a weaker economy. Digital advertising revenue for the company over all actually fell 4.5 percent, to $74.8 million, due in part to weakness at About.com, which is suffering from a change in the way Google directs traffic to informational sites.

The About Group recently replaced its chief executive and is working through a turnaround plan that executives said is still in its early phases. Revenue at About decreased 20.8 percent to $25.7 million, mainly due to decreases in both cost-per-click advertising and display advertising.

Print advertising revenue declined 10.4 percent over all. 

The Times Company derived 28.6 percent of its advertising revenue from digital business in the third quarter.

This article has been revised to reflect the following correction:

Correction: October 20, 2011

An earlier version of this article incorrectly said print subscriptions rose in the quarter. New print subscription orders and subscriber retentions rose, as did circulation revenue.

Article source: http://feeds.nytimes.com/click.phdo?i=8194f5cd280ae1430d8ff77ffe177587

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Profit Rises 37% at Archer Daniels

May 4, 2011 by Leave a Comment

The company posted earnings of $578 million, or 86 cents a share, compared with $421 million, or 65 cents a share, a year earlier. The performance met analysts’ expectations.

Revenue climbed 33 percent, to $20.08 billion, topping Wall Street expectations for $16.88 billion.

The health of Archer Daniels Midland provides a snapshot for agribusiness as a whole because it operates in almost every sector of the business as both a buyer and seller of commodities.

The company reported higher operating profit across its segments. Its corn processing unit includes its network of ethanol plants, while its agricultural services unit includes grain trading.

Archer Daniels does not break out its ethanol results but said its profit climbed $99 million, to $158 million, for its bioproducts division, which includes ethanol and food additives like lysine.

Operating profit in the agricultural services segment rose $6 million, to $171 million, amid volatile commodity markets, regional instability in the Middle East and Japan’s earthquake and tsunami.

Article source: http://feeds.nytimes.com/click.phdo?i=091d6466766bda6804f7404f776c8594

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