South Korean conglomerate Samsung Electronics Co. Ltd. (SSNLF) reported late Thursday a profit for the first quarter that surged 42 percent from last year as strong sales of its flagship Galaxy S3 smartphone and Galaxy Note 2 phablet more than offset a marginal decline in its display panel and appliances business. Sales and operating profit for the quarter came in higher than Samsung's guidance released earlier in the month.
However, the pace of profit and sales growth has slowed down amid stiff competition. Operating margins for Samsung's flagship mobile devices business, which generates the bulk of profits, have been waning recently due to its smaller presence in the high-end market as well as higher marketing expenses and heated competition. Samsung's mobile business has accounted for more than 74 percent of the total operating profit.
Samsung still lags behind rival Apple, Inc. (AAPL) in the high-end market. However, Samsung is expected to change the trend after it starts selling its next-generation flagship smartphone, Galaxy S 4, which was to begin this weekend. The company's increased presence in the high-end market will be crucial for it to maintain margins for its mobile business.
Samsung is also reportedly looking to release two other high-end smartphones in 2013, including a new version of the Galaxy Note and a device using the Intel Corp. (INTC)-backed Tizen operating system.
To boost sales, Samsung has tied up with consumer electronics retailer Best Buy Co., Inc. (BBY) to set up Samsung "Experience" stores in about 1,400 of their stores by early summer.
Meanwhile, Galaxy S 4 sales through U.S. wireless carriers are expected to be delayed by nearly a month due to the unexpectedly strong demand, which is causing inventory issues. Galaxy S4 sale is being launched through 327 operators in 155 countries, including operators such as AT&T, Vodafone and Telefonica.
Suwon, South Korea-based Samsung has reportedly beaten rival US technology giant Apple, Inc. (AAPL) hands down in first-quarter smartphone shipments, selling about 70 million units globally, higher than the 37.4 million iPhones sold by Apple.
After setting new record highs for five consecutive quarters, Samsung is now reporting a marginal sequential decline in operating profit and net profit. Quarterly sales also decreased sequentially, but remained above the 50 trillion won mark for the third successive quarter.
The world's largest technology firm by revenue reported a record net profit of 7.15 trillion won or $6.4 billion for the first quarter, up 42 percent from 5.05 trillion won in the prior-year quarter, and higher than 7.04 trillion won in the preceding fourth quarter.
Total sales for the quarter increased 17 percent to 52.87 trillion won from last year's 45.27 trillion won, but declined from 56.06 trillion won in the prior quarter.
Total operating profit surged 54 percent to 8.78 trillion won, with operating margin expanding 470 basis points to 15.6 percent from a year ago, and improving only 80 basis points sequentially.
Earlier in the month, Samsung had estimated first-quarter sales of about 52 trillion won, with an operating profit of about 8.70 trillion won.
Quarterly sales at Samsung's telecommunication division surged 46 percent to 32.82 trillion won, with 50 percent growth in mobiles devices on strong sales of Galaxy S3 smartphone and Galaxy Note 2. However, competition has intensified with new smartphone and tablet launches.
Sales at the semiconductor division, once the main source of income for the company, grew 8 percent to 8.58 trillion won, despite an industry-wide slump, but declined sequentially, with memory sales growing 5 percent year-over-year. Though PC DRAM demand continued to be soft due to weak seasonality, NAND demand remained strong due to new mobile device launches.
Meanwhile, display panel division's sales declined 17 percent to 7.11 trillion won, as TV panel shipment declined in the high-single digit percentage from last year. However, sales of OLED panels continued to increase amid higher sales of high-end panels for premium smartphones.
Digital media and appliances division sales edged down 0.2 percent, with visual devices sales also edging down 0.4 percent.
Looking ahead, Samsung's chip business is expected to show improved earnings, benefiting from solid demand for memory chips used in mobile devices after the launch of new smartphones running on Microsoft Corp.'s (MSFT) new Windows operating system.
Samsung shares are currently trading down 10,000 won or 0.67% in Friday's regular trading session at 1,484,000 won on the Kospi on a volume of 0.10 million shares.
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May 08, 2026 15:50 ET Manufacturing and services sector survey results and labor market data from main economies were the highlight on the economics news front this week. Factory orders and jobs report dominated the news flow in the U.S. Similarly, industrial production data from German garnered attention in Europe. In Asia, purchasing managers’ survey results from China and the central bank decision from Australia were in focus.