By Anu Passary | Oct 26, 2012 10:02 AM EDT
Boosted by strong sales of its Galaxy portfolio of phones, Samsung Electronics posted a fourth straight record Q3 2012 profit of $7.4 billion, helping the current smartphone market leader widen its lead over rivals.
Samsung reported that Q3 2012's (July to September) operating profit has nearly doubled to 8.12 trillion won ($ 7.39 billion) on revenue of 52.18 trillion won, which is in keeping with the company's earlier estimates.
On Oct. 5, Samsung's earnings guidance disclosed that the company estimated Q3 2012 consolidated revenue would touch 52 trillion won and consolidated operating profit was estimated to be approximately 8.1 trillion won. Additionally, Samsung's net profit rose to 6.56 trillion won ($5.97 billion).
"Samsung Electronics Co., Ltd. today announced revenues of 52.18 trillion Korean won on a consolidated basis for the third quarter ended September 30, 2012, a 26-percent increase year-on-year," stated the press release.
However, according to analysts, the company's record run will likely end in December, with profit growth slowing down as the TV market stagnates and the recent growth in high-end smartphones slows down.
"The biggest concern for Samsung is that its smartphone growth momentum will slow. It'll be difficult to maintain such a high profit margin from handsets as the market gets crowded and competition will intensify," said Nam Dae-jong, analyst with Hana Daetoo Securities.
According to a Reuters report, Samsung sold nearly 56.3 million smartphones in Q3 2012, compared to 26.9 million iPhone sales, taking the Korean company's global market share to 31.3 percent.
Even though Samsung outsells Apple when it comes to gadgets, the company's market value is only a third of Apple's $578 billion. Investors question whether Samsung can narrow the gap between it and rival in the near future, especially given that Apple, which is one of its key customers, is looking to widen its supplier base.
"Samsung has a lot of strong businesses like tablets, OLED TVs and micro-processor chips that could become its next big thing and step it up to the next level," noted Lee Sun-tae, analyst at NH Investment & Securities. "But these aren't fully ready to become a real earnings driver like the Galaxy. It will take time for Samsung to narrow the gap with Apple in tablets. Its Galaxy Tab tablet PCs aren't sexy enough to outsell Apple's iPad."
Samsung is constantly adding to its ever-growing portfolio of devices in a bid to oust rivals, but whether it can stay ahead in the race in the long run remains to be seen.
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