Samsung Has Record Breaking Quarter

Earlier this month, Samsung Electronics announced that it was anticipating what would be a record-setting quarter. The feeling at that time was that Samsung would see a quarter operating income of close to $9.4 billion.

Today, October 25, 2013, Samsung announced its official revenue for Q3 2013. The numbers do not disappoint. In fact, they were slightly better than predicted. Samsung announced about $55.59 billion in revenue with consolidated operating profit of around $9.56 billion.

Both of these figures do represent new high numbers for the company. There was a seven percent increase between Q2 and Q3 2013, but what is really impressive is the 26 percent jump from this same time last year.

These record breaking numbers were driven largely by smartphone and chipset sales. While some of these profits are attributed to the high-profile, high-end handsets like the Galaxy S4 and Galaxy Note 3, those sales mostly followed previous patterns for the quarter. The first six months saw Samsung moving 40 million Galaxy S4s.

There is the feeling that high-end smartphone sales are reaching a plateau. Considering that Samsung’s IT & Mobile Communications division saw revenue increase by just 3 percent, this seems to add credence to the point.

What we are seeing however, is an increase in sales of the lower-cost, mass-market phones. These seem to be what really helped to drive profits up. This year, we have seen a lot of companies coming out with smartphones that have fewer features. These are designed for the emerging markets and end up being the lower-cost, mass-market phones. As you can see, it has shown very good results for Samsung.

In addition to the smartphone sales, Samsung reported that on the side of the chipset business, it recorded its best earnings performance in three years. This is also due to the fact that Samsung chips are being used in more smartphones every day.

This can be seen in the fact that Samsung's semiconductor business saw the biggest growth during the quarter. Its sales of memory for mobile devices and gaming consoles drove revenue up by 12 percent from the previous quarter.

Unfortunately, the same cannot be said for its display panel business. It was less fortunate this time around. There appears to be a lack of demand for new TVs and displays. This caused operating profits to drop by 12 percent.

Lee Seung Woo, an analyst at IBK Securities Co, said, “Samsung has proved it has better tactics to win the battle. In the smartphone race, we should categorize Samsung differently from the minor league, second-tier players.”