14 DAY TRIAL // Korean mobile phone maker Samsung Electronics announced on Friday its earning results for the first quarter of the ongoing year, and posted a better-than-expected revenue, though not matching the company's performance during the last year. Even so, it seems that Samsung has managed to turn to profitability, a major switch compared to the loss it registered during the previous quarter.
During the timeframe, the company succeeded in registering sales of $7.26 billion in its telecom business, which translates into earnings of $833 million. Samsung registered a global market share of 18 percent during the quarter, growing from the 16.4 percent it saw during last year, which allowed it to see profitability.
“The results were a surprise,” Brian Park, electronic analyst at Prudential Investment & Securities, says. “What's assuring is that Samsung displayed its ability to squeeze its costs to improve profitability at a time of crisis.”
Seoul-based KTB Asset Management Fund Manager Lee Jin Woo stated that the company's mobile phone unit benefited from “the demise of its rivals.” The amount of units shipped by the company raised up to 45.8 million in the three-month period, one percent lower compared with the same period of last year, yet its sales remained steady when compared with those registered by its rivals.
Samsung’s cellphone business posted a 36-percent increase in revenue, mainly due to better operating margins. The net profit was of $696 million, up from $119 million a quarter before, and $692 million in the first quarter of 2008. The operating margin went up 12 percent from two percent a year ago, and was higher than Nokia's, the leading phone maker in the world, which registered an operating margin of 10.4 percent during Q1 2009.
When making previsions for the rest of the year, the company remains cautious. “We can't say with confidence that profitability will increase in the second quarter,” Robert Yi, the vice-president heading Samsung's investor relations team, adds. “Also, we cannot rule out the possibility of a repeat of last year when we had a good first half and a disappointing second half.”