Samsung’s smartphone array drives record profit in Q3, HTC stumbles

Jungah Lee And ?lulu Yilun Chen (Bloomberg)
Filed on October 5, 2013
Samsung’s smartphone array drives record profit in Q3, HTC stumbles

Samsung Electronics Co’s strategy of selling smartphones at every price point spurred record earnings at Asia’s biggest technology company and helped push Taiwanese competitor HTC Corp to its first-ever quarterly loss.

Samsung’s smartphone array drives record profit in Q3, HTC stumbles (/assets/oldimages/sung_10052013.jpg)

Galaxy Note 3 and Galaxy Gear wristwatches are displayed at a showroom at the Samsung Electronics headquarters in Seoul. Operating profit at Samsung Electronics hit another record high in the July-September quarter. — AP

Samsung’s third-quarter operating profit rose to about 10.1 trillion won ($9.4 billion), beating analyst estimates, on sales of cheaper handsets in emerging markets. HTC posted a net loss of NT$2.97 billion ($101 million) in the same period as its global smartphone market share plunged by more than half.

While HTC has focused a revival on its flagship One handset and $12 million marketing deal with actor Robert Downey Jr, Samsung has expanded its range of mid-priced smartphones such as the Galaxy Golden and S4 Mini to capture sales in China and India. Samsung also has benefited from rising prices for the memory chips it makes for customers including Apple.

“Companies can’t survive with a single device for more than six months or a year,” said Lee Seung Woo, a Seoul-based analyst at IBK Securities Co. “Samsung’s identity is all about speed, which is something that no one can easily mimic. The market is changing extremely fast.”

The results from both companies were preliminary with no division details released. Audited earnings are due later this month.

Shares of Samsung were unchanged at 1,418,000 won in Seoul. The stock has dropped 6.8 per cent this year, compared with an unchanged benchmark Kospi index.

HTC rose 1.5 per cent to NT$135 at the close in Taipei, paring its decline in the past two years to 80 per cent.

Suwon, South Korea-based Samsung, the world’s biggest smartphone maker, is tapping into demand for low-cost Galaxy devices in developing regions, including the Middle East. The biggest chipmaker, which supplies the iPhone 5s, is benefiting from higher prices after a fire at competitor SK Hynix Inc.’s plant in China hampered production.

“Samsung was able to extend its mid-priced smartphone offerings such as S3 and other Galaxy models, mainly in emerging markets,” said Park Kang Ho, a Seoul-based analyst with Daishin Securities Co. “The fourth quarter looks even better.” Sales at Samsung were about 59 trillion won in the third quarter, the company said on Friday. That compares with the 59.7 trillion-won average of 36 estimates.

Samsung sells at least 40 smartphone models, according to its US website, helping it weather stalling demand for high- end devices. That compares to about 25 devices listed by HTC.

HTC posted revenue of NT$47 billion in the quarter, with revenue declining for eight straight quarters. Tepid sales in May led AT&T Inc, the second-largest US wireless carrier, to cut the price of HTC’s First handset and consider dropping the device that integrates Facebook social-networking features. The release of the HTC One was delayed amid a shortage of camera components, which pushed it into the same timeframe as Samsung’s flagship Galaxy S4.

“HTC needs to figure out if it just wants to focus on the high-end market or the mid-to low-end segment, and right now it is missing out on both,” said Wang Wanli, a Taipei-based analyst at CIMB Securities Ltd.

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