Samsung Sells 58 Million Smartphones, Posts Record Profit
Samsung sold tens of millions of its Galaxy smartphones, boosting third quarter profits to a record high of $7.3 billion.
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Samsung had a good third quarter. The company recorded its best-ever profit, earning $7.3 billion. It marked the fourth straight quarter of record profits for the Korean electronics maker. Samsung's results were buoyed by sales of its Galaxy smartphones.
Samsung doesn't report hard sales figures of its cell phones, but analyst estimates put the number between 58 and 60 million. As many as 18 to 20 million of those unit sales are Samsung's flagship Galaxy S III smartphone, which has been on sale since May. As a point of comparison, Samsung sold about 50 million handsets during the second quarter of 2012.
Samsung's smartphone business is responsible for about two-thirds of the company's $7.3 billion profit.
The strong sales of Samsung's cell phones helped to offset losses in other businesses. For example, profits from its DRAM (dynamic random access memory) chip business dropped 14% during the third quarter thanks to fewer orders from its customers. Falling demand for its laptop and other computers dampened third-quarter earnings further.
What's really on the mind of investors, though, is Samsung's fourth quarter. Samsung warned that it might see a drop in profit for a number of reasons.
First, Samsung plans to increase spending on marketing. Now that the iPhone 5 is available, Samsung plans to go head-to-head with advertisements of its own devices, such as the Galaxy S III, Galaxy Note II, and other high-end phones.
Second, the record profits means Samsung has to commit to performance-related payouts to its 206,000 employees.
Third, Samsung might actually have to pay rival Apple $1.05 billion in damages for violating its patents. Even if the money doesn't change hands during the fourth quarter of the year, Samsung will have to set it aside.
Samsung has a strong smartphone portfolio heading into the holiday quarter. The Galaxy Note II, which is a significant improvement when compared to its predecessor, hits U.S. shelves in November. It will be sold by AT&T and Sprint (if not other carriers). Samsung hopes the Note II succeeds where the original Note failed--at least in the U.S. It plans to announce formal plans to sell the device at an event scheduled to take place October 24.
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