Samsung Releases Third-Quarter Profit Predictions
October 5, 2012

Samsung Releases Third-Quarter Profit Predictions

Michael Harper for — Your Universe Online

Samsung´s Galaxy S III is more than a popular alternative to the iPhone, it´s also a money making machine. The South Korean smartphone maker released its third quarter predictions today, saying its Android-based phone may have helped to drive their operating profit for the third quarter to record levels of $7.3 billion. Since its release this summer, Samsung predicts they have shipped 18 million of these phones, according to the AFP.

These numbers could be larger than what analysts had predicted for the company which is currently engaged in several legal battles with Apple all across the world. It seems consumers aren´t too concerned about these lawsuits, however, as Samsung also reported an estimated 26% surge in sales over the last quarter.

This $7.3 billion prediction for operating profits could represent a 90.5% increase of the same period last year and may beat last quarter´s record breaking operating profit of $6 billion. Investors will often take note of numbers like these and, when trading opened this morning in Seoul, Samsung shares were trading at $1,248. After spending a few hours at the highest levels in 5 months, shares dropped back down slightly to $1,233.

The Galaxy S III is almost certainly propelling the company to record-breaking profitability, but Samsung was already on their way to this success as their operating profits have been rising since the first quarter of 2011. The company has even overtaken Apple during this time as the world´s largest smartphone manufacturer.

Though their profits continued to climb, their shares have not seen similar success; one main reason for this is the famous summer battle between them and the company they´ve overtaken, Apple. Samsung lost a high-profile patent infringement suit to Apple and were ordered to pay damages to the tune of more than $1 billion. Samsung has, of course, appealed this ruling and continues to wage their war against their largest rival.

At present, both companies have made attempts to place injunctions and ban the sale of one another´s flagship devices, the iPhone 5 and the Galaxy S III.

According to Samsung´s third quarter predictions, healthy sales of their latest smartphone are not only propelling their profits, they´re also a driving force behind the rest of their smartphone and other mobile device numbers as well. With the 18 million S IIIs sold, Samsung now predicts they´ll have shipped as many as 59 million smartphones total, and 106 of all mobile devices. By the numbers, Samsung´s Galaxy S III could make up a little more than 30% of all their smartphone sales, making it a significant player in their lineup.

Samsung´s heavy marketing push for this new phone, however, may reduce their profit during the 4th quarter, say some analysts. Speaking to the AFP, NH Investment and Securities analyst Lee Sun-Tae said these earnings might be a peak for the company.

"The fourth-quarter operating profit is expected to decrease... as slower profit at its telecom unit seems inevitable due to an increase in marketing expenses," said Lee.

Another analyst, James Song of KDB Daewoo Securities, told the AFP he expects these numbers to be mostly the same next quarter, with profits remaining as high as Samsung predicts they will be during this quarter.