South Korean electronics giant Samsung’s latest quarterly results show the company in prime shape, with a stunning $7.9 billion operating profit and $47.5 billion in revenues. But like Apple, growth is starting to look like an issue.
Samsung sells a wide portfolio of electronics and appliances, but most of its focus these days is on mobile devices. Sales of its Galaxy S III and Galaxy Note II phones around the world boosted its bottom line and led its mobile division to a 7 percent increase over the year-ago quarter. Next up on the company’s smartphone line up is the powerhouse Galaxy S 4, which will help boost the company up the next few quarters.
While the numbers generally look good, overall growth for Q1 2013 actually slowed. Operating profit dropped 1 percent year-over-year, and revenue was down 6 percent versus the previous quarter. Last quarter, profits grew by 54 percent and revenue increased about 17 percent.
The company also believes competition is about to get more fierce, which could dampen sales.
“We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market while TV growth will continue to wane in developed markets,” Samsung senior VP Robert Yi said in a statement.
To counter growth concerns and fight off the competition, Samsung will continue to invest in R&D and creating new products. (Smart watches anyone?)
“Although market uncertainties from the European crisis and the slow global economic recovery are still lingering, we expect to increase R&D spending for strengthening our competitiveness ahead of planned new product launches,” Yi said.
Samsung’s chief mobile rival Apple has seen its stock plummet in recent months over concerns the company is not innovating enough and faces serious growth hurdles because it isn’t launching new products. We’ll see if Samsung can avoid Apple’s fate during the next year.