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Question of the Day
SEOUL, SOUTH KOREA (AP) - Samsung Electronics Co., the world's largest technology company by revenue, estimated Tuesday that its operating profit for the last quarter of 2012 nearly doubled to a record high, likely driven by continued smartphone momentum.
In its earnings preview, the South Korean firm put median October-December operating income at 8.8 trillion won ($8.3 billion), an 89 percent surge from a year earlier. The figure was also 9 percent higher than the previous record high in the third quarter.
The median estimate was slightly higher than the market consensus of 8.7 trillion won, according to Yonhap Infomax, a Seoul-based financial information provider.
Samsung estimated its fourth-quarter revenue at 56 trillion won, up 18 percent from a year earlier.
The company did not elaborate on its quarterly financial results. Samsung will disclose its full earnings including breakdown figures for each business division at the end of this month.
Analysts said nearly 70 percent of the operating income for the quarter was likely generated by Samsung's mobile division that makes and sells Galaxy smartphones and tablets, which helped offset heavy marketing costs during the end of the year.
Samsung's mobile business, which recently overtook Apple in smartphone sales and Nokia in mobile handsets, has driven Samsung's earnings momentum in the latest quarters. Samsung's quarterly operating profit has risen steadily since the final quarter of 2011, while rival mobile-phone makers, such as Nokia, Research In Motion and HTC, have experienced falling market share and profits.
Samsung's smartphone sales in the last quarter of 2012 rose 12 percent from the previous quarter to 63 million smartphones, according to analysts' estimates. What helped Samsung retain its market share during the winter holiday season in the face of Apple's iPhone 5 was the Galaxy Note II, a giant smartphone with a 5.5-inch screen and a digital pen that made its debut at the end of September. Its flagship Android device, the Galaxy S III, continued to perform well in the market, analysts said.
Jin Sung-hye, an analyst at KTB Securities, said Samsung shipped 15 million units of the S III and 7 million of the Note II during the final three months of 2012. The surprise popularity of the Note II device prompted other handset makers to increase the screen size of their smartphones as consumers embrace a wider mobile-phone screen to watch visual contents.
Market watchers speculate that Samsung will introduce a new version in the Galaxy S series, likely to be named the Galaxy S IV, before the end of April. Samsung usually rolls out the latest alteration of its Android-based flagship smartphone before the end of the second quarter, taking advantage of the time when rivals are months away from introducing new smartphone models.
With the early rollouts of the new Galaxy S model and an update to the Note series, analysts predict Samsung will sell at least 300 million smartphones in 2013, after surpassing 200 million smartphone sales last year, widening its lead over Apple.
The Suwon, South Korea-based company plans to act more aggressively to advance its share of the tablet PC market this year, which is still dominated by Apple's iPad, its executives said in October conference call. The release of mini tablets that are between the size of smartphones and standard tablets also opens up a new growth area for Samsung.
While the mobile phone division replaced Samsung's semiconductor business as the biggest profit generator, robust demand for smartphones around the world is benefiting Samsung's semiconductor operation as well.
Analysts said Samsung's semiconductor division fared better in the last quarter than the quarter before as higher Samsung phone sales and launches of new mobile products by its clients lifted demand for Samsung's mobile processors.
By Michael P. Orsi
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