Samsung was optimistic about its third quarter performance — but apparently not optimistic enough.
The South Korean technology giant just posted another record quarter, announcing $55.59 billion in revenue and $9.56 billion in operating profit, according to a regulatory filing today. Both figures represent new benchmarks for the company, with operating profit up a massive 26 percent from last year.
But despite Samsung’s record numbers and “world’s most profitable smartphone vendor” title, investors and analysts are concerned that the high-end smartphone market is reaching saturation, which would affect Samsung’s bottom line going forward.
“I think there is concern for all players in the smartphone business as the high-end gets saturated and technology innovation slows down impacting replacement cycles,” said Carolina Milanesi, a consumer devices analyst at Gartner. “The question for Samsung is more about how able are they to drive value from the software, apps, and ecosystem, as I see very little interest from consumers on these over the sexy and quality hardware that Samsung releases.”
While smartphone shipments increased by 10 percent, the company’s IT & Mobile Communications division only saw a three percent increase in revenue. As Galaxy S4 sales slowed, Samsung’s cheaper smartphones drove the company’s modest mobile sector growth.
Samsung’s semiconductor business was its standout division this quarter, roughly doubling in size from last year with 2.06 trillion won ($1.94 billion) in revenues.
This was the seventh quarter running that Samsung posted record earnings. Analysts expect to see another record profit next quarter on the strength of Samsung’s chip business.
Updated at 10:50 AM PT with a quote from Gartner analyst Carolina Milanesi
Samsung Group is a South Korean multinational conglomerate company headquartered in Samsung Town, Seoul. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Samsung brand, and is the largest Sout... read more »
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