Samsung warns of smartphone slowdown
SAMSUNG has reported record quarterly profits up 76pc on the back of Galaxy smartphone sales, but warned there were signs that future growth could be held back by intensifying competition.
The note of caution follows soon after Apple’s iPhone sales disappointed investors.
“The furious growth spurt seen in the global smartphone market last year is expected to be pacified by intensifying price competition, compounded by a slew of new products,” Samsung said in its earnings statement.
It said that the strongest growth in the future would come in the market for low cost handsets in developing countries.
“In the first quarter, demand for smartphones in developed countries is expected to decelerate, while their emerging counterparts will see their markets escalate with the introduction of more affordable smartphones and a bigger appetite for tablet PCs throughout the year,” Samsung told investors.
While Apple’s iPhone 5 failed to meet expectations, sales of Samsung’s broad Galaxy range continued to power the Korean giant’s rise to the top tier of global technology firms.
It did not provide unit sales figures, but analysts estimated Samsung sold 63 million smartphones in the quarter, including 15 million Galaxy S IIIs and 7 million Galaxy Note IIs, compared to Apple’s 47.8 million iPhones. Apple's sales were a new record but fell short of Wall Street targets.
Samsung’s net income rose to £4.2bn from £2.3bn in the same three month period a year earlier, beating expectations. Profits in its mobile phone division, the biggest in the world, more than doubled on the year to £3.2bn.
"Overall its earnings momentum remains intact, and smartphone shipments will continue to grow even in the traditionally weak first quarter, as Samsung's got a broader product line-up and Apple appears to be struggling in pushing iPhone volumes aggressively," said Lee Se-chul, a Seoul-based analyst at Meritz Securities.
Apple shares have dropped by more than a third since mid-September as investors fret that its days of hyper growth are over and its devices are no longer as 'must-have' as they were.
By contrast, shares in Samsung have risen 12 percent in the same period as the company once seen as quick to copy the ideas of others now sets the pace in innovation.
Some industry observers expect Samsung to introduce its next flagship smartphone, the Galaxy SIV, at a special event the firm will hold in Monaco early next month.
Dominic Sunnebo of industry analysts Kantar Worldpanel ComTech said competition is intensifying.
"Samsung is the number one handset manufacturer in Britain, driven by its wide ranging portfolio from the wallet friendly Galaxy Ace through to the boundary pushing Galaxy Note II," he said.
"As most developed markets near or surpass 50 per cent smartphone penetration – it’s 61 per cent in Britain - easy wins are certainly becoming harder to find.
"In Great Britain there is a significant shift to the contract market which exacerbates this further as consumers find themselves tied into 24 month contracts. This is an area that carriers and retailers alike are trying to address, with deals providing a discount to consumers wanting to upgrade early, but it remains a difficult line to tread between maintaining driving consumer satisfaction and maintaining margins.”
Christopher Williams, Telegraph.co.uk