Samsung Profits Jump As Smartphone Sales Outstrip Apple

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Samsung reported record first-quarter profits boosted by a surge in sales of its Galaxy smartphones as it outsold Apple’s iPhone and became the world’s top mobile phone maker.

Net profit nearly doubled to 5.05 trillion won (£2.76bn) for the three months to the end of March, with more than 70pc of Samsung Electronics’ operating profit coming from its mobile businesses.

During the quarter, Samsung overtook Nokia (Stockholm: NOKI-SEK.ST – news) as the world’s top handset maker for the first time, ending the Finnish firm’s 14-year reign, according to a report by research firm Strategy Analytics published on Friday.

The company sold 93.5m handsets in the first quarter, taking 25.4pc – or 1 in 4 – of the global mobile phone market.

After narrowly beating Apple last year, Samsung’s smartphone sales exceeded Apple’s by a large margin in the first quarter. Strategy Analytics said Samsung became the world’s top smartphone maker, selling 44.5 million handsets in the January-March period, followed by Apple’s 35.1 million.

Although Apple’s iPhone and iPad business remains more lucrative, earning $11.6 billion (£7.17bn) in the January-March quarter, more than twice as much as Samsung, even though its revenue was about 10pc less.

Samsung Electronics share rose 2.54pc.

Operating profit hit a record high: 5.85 trillion won, which was in line with the company’s guidance provided earlier this month. Sales rose 22pc from a year earlier to 45.3 trillion won.

Strong demand for high-end smartphones, such as the Galaxy Note and the Galaxy S2 introduced last year, helped mask lower profit from memory chips, another Samsung flagship business.

Samsung will announce a new version of the Galaxy phone next week and global demand for personal computers is picking up, bringing more cash to memory chipmakers.

Once regarded as a laggard in smartphones, Samsung moved rapidly to take on Apple with Google’s Android operating system.

Samsung’s rise came largely at the expense of Nokia. The Finish handset giant, which had been the world’s biggest handset maker since 1998, reported a dismal loss in the latest quarter and fell behind Samsung in shipments.

According to Strategy Analytics data, Nokia sold about 10 million fewer handsets than Samsung in the quarter.

Samsung’s mobile business president, Shin Jong-kyun, told reporters in February that it aims to sell 380 million handset sales this year, including 200 million smartphones. The company shipped 330 million handsets in 2011, including 97 million smartphones.

While Samsung fights Apple in the smartphone and tablet markets and in bitter patent lawsuits on four continents, its first-quarter results also owed something to brisk sales of Apple’s iPhone and iPad.

Apple, which is Samsung’s key customer in its semiconductor and display screen businesses, was credited for helping turn around Samsung’s display panel division into profit.

Samsung’s display panel business posted a 280 billion won profit as increased sales of lucrative 3-D TV panels and high-resolution tablet PC panels propped up the bottom line.

Samsung, which is the world’s biggest supplier of memory chips, said its operating profit from its semiconductor business in the first quarter reached 760 billion won, less than half from a year earlier. Weak demand for personal computers sapped memory chip prices and forced Tokyo-based Elpida Memory Inc. to file for bankruptcy in February.

The division that makes TVs and home appliances posted 530 billion won in operating profit. Samsung is the world’s largest maker of flat-panel TVs, a sector that it competes with LG Electronics Inc. of South Korea and Sony Corp. of Japan.

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