Samsung Sets Profit Record, but Growth, Margins Suffer Slightly

From DailyTech: Apple, Inc. (AAPL) set perhaps too high a bar with years of gaudy growth, new products and record products. Now, even as it earns an epic $13.1B USD, it saw shares hammered as a result of shrinking margins and questions of legacy.

For Apple's arch-rival Samsung Electronics Comp., Ltd. (KSC:005930), which just posted its earnings last night, the story was a bit of the same. Samsung recorded a record profit of $6.54B USD (7.04T won), or almost precisely half of the profit Apple made for the quarter. That profit marks a rise of 76 percent from a year ago, and narrowly bests analyst predictions of $6.39B USD (6.87T won).

It mustered record profitability, despite some bad news. Margins "fell to 17.4% in the fourth quarter, down from the 18.8% marked in the previous quarter". Additionally, Samsung saw cell-phone sales grow 58 percent, which might seem impressive were that not a fall from last year's eye-popping 82 percent growth.

Samsung raked in $51.12B USD (56.06T won) in total revenue, up 18 percent from a year before. Revenue was roughly in line with the analyst prediction of 56.22T won. The profit-driving telecom business accounted for 62 percent of the company's operating profit.

Analysts estimate that Samsung moved around 60 million smartphones worldwide for the quarter, up from 36.5 million smartphones a year ago. The surge comes thanks to strong continued growth of the Galaxy brand of smartphones and mini-tablets. Samsung maintained a narrow lead over Apple in sales (Apple moved 47.8m iPhones), despite the strong relief of pent-up demand brought by the release of the iPhone 5.

The most troubling news for Samsung was how a strengthening South Korean won might hurt Samsung's profitability in 2013. Samsung estimates that up to 3T won ($2.79B USD) could be trimmed of its profits in 2013. Exactly how much that hurts Samsung depends a lot on how much it continues to grow.

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