Samsung Feels The Pinch
By Carlo Longino, Fri Oct 15 18:30:00 GMT 2004
The Korean manufacturer is selling plenty of handsets, but margins are slipping as rivals put pressure on prices.
Samsung Electronics' overall growth slowed as the prices of semiconductors and flat-screen LCDs fell, and its mobile unit saw profits fall 18 percent from last year, even though it sold 52 percent more handsets. The unit earned 610 billion won (about $527 million), driven by sales of 22.7 million handsets, but margins slipped to 12.7% from 16.1% in the first quarter.
Just as Nokia said yesterday its price cuts were gaining it market share at the cost of some reduced profitability, a Samsung exec said the price cuts with which the company was forced to follow should boost unit sales in the fourth quarter. Samsung expects its share of the mobile-phone market to be at 14 percent for the full year, up from 11 percent last year, and though it lost some share in the second quarter -- when incidentally it sold the same number of devices -- it wouldn't be a surprise if the company passed Motorola and took the number-two spot behind Nokia before the end of the year.
Judging by Nokia's figures in its earnings release (which admittedly always differ from outside analysts' numbers), Samsung would appear to have about 14% market share in the quarter. Take those figures with a grain of salt, though, since no two people calculate share in the same way. Depending on which analyst's numbers you like, that could be anywhere from a slight growth to a 2-percent gain over the second quarter. There's bound to be some anticipation at Samsung's HQ in the run up to Motorola's earnings announcement on Tuesday to see where the two companies stand.