Samsung: handset shipments up, profits down

Samsung Electronics Co. Ltd. handset shipments in the fourth quarter of last year reflected a nearly 18 percent increase over the year-ago quarter, which the electronics conglomerate credited to sales of its Ultra Edition handsets, particularly the Blackjack smartphone, and sales in Europe and China. Shipments of 32 million units for the quarter exceeded the company’s own projections.
Handset-related revenue, however, decreased three percent over the prior quarter to about $4.6 billion. Operating profit for its telecom division, largely comprised of its handset business, declined 34 percent quarter-on-quarter. Samsung actually reported an increase in average selling prices for exported units, due to strong sales of high-end handsets, while ASPs declined in its domestic market due to fierce competition.
The juxtaposition of increased volumes and decreased revenue-and pressure on margins-may become a familiar pattern as handset vendors report earnings this month for the critical fourth quarter. Already Motorola Inc. has warned of lower revenues in the fourth quarter.
Despite warning of a difficult quarter ahead, Samsung’s stock was buoyed by its announcement that it would purchase of some $2 billion worth of its own shares.
Samsung’s overall profits fell nearly 9 percent, which analysts said reflected weak shipments of flash memory chips and eroding prices for flat screen TVs. The company’s main businesses include handsets, which account for about one-third of overall revenue, semiconductors (also about one-third of revenue), LCDs, digital media and appliances.