HUA HIN, Thailand - Samsung
Electronics this week cemented its dominance of
the global smart-phone market, as strong revenue
and profit gains for its most recent quarter
outshone results from rival Apple. Even so,
shareholders sold stock in the South Korean
company after it said the strengthening won may
cut operating profit by at least US$2.8 billion
this year.
Samsung reported a 76% gain in
quarterly profit to a record $6.6 billion and an
18.5% year-on-year jump in revenue to 56.1
trillion won (US$52 billion). Analysts estimate
overall shipments of Samsung mobile phones (the
company did not give details) were
110 million, with 60 million
smartphones, for the quarter. The mobile phone and
telecoms sector accounted for 62% of the company's
overall profit. The shares declined 2.48% in
Seoul.
Fans and shareholders of US rival
Apple were left with a darker outlook and a more
bitter taste in their mouths as iPhone sales came
in below expectations for the third straight
quarter. Shares of the world's largest tech
company dropped 12% on Thursday to $450 after a
10% slump to $463 in after-hours trading on
Wednesday.
Analysts had forecast 50
million iPhone units sold for the December
quarter. Apple said 47.8 million were sold, still
enough for it to claim a record and up 29% from
the same quarter the previous year. Revenue grew
but profit remained flat in its first fiscal
quarter of 2013, during which sales of iPhones and
iPads rose. Mac computer and iPod shipments
dropped.
Apple's net profit for the last
quarter matched that for the first three months of
2012 at $13.07 billion amid higher manufacturing
costs.
Apple's dominance in the market may
be beginning to wane, argue some analysts. "It's
going to call into question Apple's dominance in
the space. It's still one of the strong players,
the others being Samsung and Google. It's still a
two-horse race, but [Google's] Android operating
system, used by many mobile-phone manufacturers]
continues to grow rapidly," stated one analyst.
Mac sales plummeted over 20% to 4.1
million during the quarter, reflecting the
slowdown of the overall personal computer market
as global PC sales fell 6.4% from the same quarter
in 2011.
Apple's stock is now down 36%
from its September 19 record high of just above
$700 and the company has lost about $230 billion
in market value. Shares for many of Apple's
suppliers, including Skyworks, Cirrus Logic and
Qualcomm have also tumbled.
Competition
from lower-priced rival devices from Samsung and
indications that the premium smart-phone market
could be at saturation point in developed markets
may have added to investor anxiety.
According to one, "You can't just keep
rolling out iPhones and iPads and think that
everybody needs a new one. There are plenty of
competitors like Samsung and other legitimate
competitors like them."
A number of
production cutback rumors have been plaguing the
company and in an unusual move Apple actually
addressed them by stating "Yields might vary.
Supplier performance can vary. The beginning
inventory positions can vary. There's just an
inordinately long list of things that would make
any single data point not a great proxy for what's
going on."
This statement served only to
confuse the issue for company followers.
On a brighter note, iPhone sales more than
doubled in China with revenue from the region
totaling $7.3 billion, up 60% from the year-ago
December quarter.
Google conversely saw a
6% rise in shares on Wednesday and a further 1.7%
gain on Thursday as improvements in the company's
core search business in the fourth quarter calmed
concerns over slower growth due to a shift in
advertising to mobile platforms. Google's measure
of success is the cost-per-click that advertisers
will pay the company to be part of its Adsense
program, which puts text and display ads on
millions of websites.
Cost-per-click has
been in decline over the past year as advertisers
were reluctant to pay the same for ads on mobile
phones as they would on a full screen. This
decline slowed in the last quarter indicating a
shift in the pattern and possible upturn for
Google's online advertising division.
The
company beat expectations by reporting US$14.42
billion in revenue for the fourth quarter, up 36%
from the previous year, giving Google its first
$50 billion year. Net income for the period was
reported at $3.57 billion, up from $3.11 billion a
year ago.
Microsoft's bet on a new
operating system to boost end-of-year figures
failed to balance the books in the company's
favor. This week the software maker posted a 3.7%
decline in net income to $6.38 billion for its
fiscal second quarter, down from $6.62 billion a
year earlier. Revenue rose 2.7% to a record $21.46
billion
Microsoft said the boost in
revenues came from pre-sales and upgrades of
Windows 8. Overall, the company's Windows division
experienced a 24% revenue increase in the quarter
to $5.88 billion.The figures were lower than some
analyst estimates and well below the 70% revenue
jump that it had in the quarter after it released
Windows 7 in 2009. To date, more than 60 million
Windows 8 licenses have been sold.
The
share dipped 2.1% in after-hours trading on
Thursday to $27.63.
Martin J
Young is an Asia Times Online correspondent
based in Thailand.
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