Samsung Profits Are Up 80%, But You Have to Read The Details

by Hugh Brownstone1 Comment

Samsung's smartphones are getting hammered by Apple at the high end and Chinese smartphone vendors at the low-end, and much of their rise in profits is attributable to foreign exchange rates. Good thing their component business – fueled in part by the fact that Samsung is one of two manufacturers of the A9 processor in every iPhone 6s – is doing so well.

Beyond its smartphones and tablets, the  NX-1 [B&H | Amazon] is a breakthrough product for Samsung. The company,  is better positioned than anyone else to take on Apple, and in theory is in a good position to take on the photo giants, too. So reading about an 80% jump in profits might at first lead one to believe that Samsung is on a roll.

Slow down.

Samsung is an incredible company, but too much of that profit jump is mostly paper.

Keep a close look at the details – it makes what Apple is doing in the smartphone space all the more impressive, and it is another indication of just how quickly Chinese manufacturers have stepped to the very front of top-tier manufacturers.

Samsung Electronics Says Its Profit Rose Nearly 80% in Third Quarter

Via NY Times:

The preliminary report for July to September suggested that the company’s emphasis on making microchips was paying off. The results ended the company’s two-year streak of shrinking profits.

The South Korean electronics maker estimated operating profit at 7.3 trillion won, or about $6.3 billion, in the third quarter, well above the 4.1 trillion won posted a year earlier. Sales totaled 51 trillion won, up about 8 percent from 47.4 trillion won from the same period a year earlier. The numbers are preliminary; Samsung will post its final earnings this month.

Photo Credit: NY Times | A Samsung Electronics showroom in Seoul. Analysts said the company’s chip business was probably lifted by strong sales of Apple’s iPhone 6s and Samsung’s own Galaxy Note 5. Credit Kim Hong-Ji/Reuters

Photo Credit: NY Times | A Samsung Electronics showroom in Seoul. Analysts said the company’s chip business was probably lifted by strong sales of Apple’s iPhone 6s and Samsung’s own Galaxy Note 5. Credit Kim Hong-Ji/Reuters

The results, which handily beat analyst expectations, sent Samsung’s shares up more than 5 percent in early trading in South Korea. Though the big jump in profit comes in part from the weakness of the company’s performance last year and from a weakening Korean currency, the increased profit is a fresh sign that one of the company’s two major engines of growth, its semiconductor division, is faring well.

Read full article at NY Times “Samsung Electronics Says Its Profit Rose Nearly 80% in Third Quarter”

(cover photo credit: snap from NY Times)

Hugh Brownstone

Hugh Brownstone

Hugh is the founder of Three Blind Men and An Elephant Productions. He and the team write, direct, shoot, score, and edit web-centric films; conduct photo shoots; and write copy, white papers and blog posts. Hugh also writes screenplays (he recently optioned a TV pilot) and just published his first eBook (Apple's iPhone: The Next Video Revolution). If it's about telling stories, it's in their wheelhouse.

And always with the ambition of authenticity, humanity and wit.
Hugh Brownstone

Comments

  1. The NX1 is a break through product in terms of it’s innovative technology, but it owns less than 1% of the mirrorless market, if that, so it certainly isn’t a factor in an 80% profilt margin.

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