Samsung predicts fifth record quarter

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Samsung predicts fifth record quarter

Warwick Ashford

Samsung Electronics expects its fifth consecutive quarter of record profits driven mainly by smartphone sales.

The South Korean firm estimates an operating profit of $8.3bn for the quarter to the end of December, up 90% from the same period a year earlier.

The forecast ahead of the full earning statement on 25 January contrasts with results announced by Taiwan-based rival HTC, which posted profits after tax of $34m for the quarter, down 90% of the same period in 2011.

HTC revenues were also well down, at $2bn for the three-month period, compared with $3.4bn the previous year.

Analysts say HTC has been squeezed out by Samsung and Apple at the high end of the market and by cheap Chinese Android device makers at the bottom end.

HTC has struggled to compete on volume and price with Apple and Samsung, but is now pushing into the phone-tablet market, which some analysts predict will be one of the big hits of 2013, according to the Guardian.

Samsung’s success is largely attributed to its flagship handset, the Galaxy SIII, which has helped make the company the best-selling mobile brand in the world, according to studies by analysts Juniper Research and Gartner.

Analysts believe that the popularity of the company’s smartphones is likely to boost Samsung’s profits even further in coming months, but that a slowdown may be on the horizon.

Samsung is facing increased competition from Apple, Nokia and HTC, which have all released new handsets in an attempt to increase market share.

Analysts report there are concerns that the pace of Samsung’s sales growth could slow in coming months.

"Investors are a bit concerned that Samsung's momentum may slow in the first half after posting a series of record profits," said Kim Sung-Soo, a fund manager at LS Asset Management.

"The smartphone market is unlikely to sustain its strong growth, as advanced markets are nearing saturation," he told the BBC.

Kim said any slowdown in smartphone sales could have a significant impact on Samsung because other parts of its business, such as manufacturing memory chips, have already been hit by a fall in demand.


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