Samsung Smartphone Sales Help Hike Q1 2016 Profit, Revenue

By Todd R. Weiss  |  Posted 2016-04-28 Print this article Print
Samsung smartphone sales

The March release of Samsung's latest Galaxy S7 and S7 Edge flagship phones apparently helped raise the company's Q1 revenue and profit.

Samsung threw the dice in March and released its latest flagship Galaxy S7 and Galaxy S7 Edge smartphones a month earlier than usual, which has apparently led to revenue and profit figures that are 6 percent and 12 percent higher than the same quarter one year ago.

The news was finally good for the beleaguered smartphone, consumer appliance, display and semiconductor company, especially after a run of tough financial quarters over the past year as it fought stiff competition from Apple's iPhones and others.

In the company's first quarter of 2016, Samsung posted revenue of $43.8 billion (49.78 trillion Korean Won) and net income or profit of $5.58 billion (6.68 trillion KRW), which are up 5.7 percent from 47.12 trillion KRW in revenue and up 12 percent from 5.98 trillion KRW in profit from the same quarter one year ago. The figures were announced by Samsung on April 28.

The 49.78 trillion KRM in revenue exceeded the 49 trillion KRW the company announced in early April when it released preliminary estimates based on early figures.

The company's earnings rise was "led by the early launch and successful sales of the flagship Galaxy S7 and S7 Edge (pictured), improved memory product mix, expanded 14nm supply of System LSI products and increased sales of OLED panels," Samsung said in a statement.

The company's mobile division, which includes smartphones, brought in 27.60 trillion KRW in Q1 2016, which is up from the 25.89 trillion KRW brought in one year ago. Profit for the mobile division was 3.89 trillion KRW, up from 2.74 trillion KRW one year ago. The company said it also saw good performance in its mobile division due to "strong sales and improved cost efficiency through the streamlining of mid-to-low-end smartphone lineups."

Samsung has been continuing in the last year to battle its way back from several tough financial quarters caused largely by cheaper phones from global competitors and shrinking sales as consumers waited to buy Apple's latest iPhone 6 models when they went on sale last September.

Several IT analysts told eWEEK that Samsung's Q1 numbers brought relatively good news for the company.

Charles King, principal analyst at Pund-IT, said that the company's year-over-year profit increase "handily beat analyst's estimates" and was driven largely by sales of the new Galaxy S7 handsets. "That was notable since the new handsets didn't become available until March, which is the last month of the quarter."

At the same time, Samsung "also seems less encumbered by weakening smartphone sales plaguing key competitors, like Apple," said King. "Overall, Samsung enjoyed a strong first quarter but market conditions could mar the company's performance later this year."

Another analyst, Rob Enderle of Enderle Group, said one reason for Samsung's success in the quarter is that the company "tends to do demand-generation marketing much more aggressively on phones" than competitors such as LG "and it certainly paid dividends."

That sales marketing success by Samsung with its S7 and S7 Edge phones likely even caused lower sales for Apple's competing iPhone 6 models, which earlier this week contributed to that company's first quarterly revenue decline since 2003, said Enderle. "Samsung regularly out-markets their peers and generally outperforms them when they do this.  When they pull back on marketing they then tend to fall off particularly against Apple who has been historically far more consistent" in the past.

Jan Dawson, chief analyst with Jackdaw Research, told eWEEK that Samsung's Q1 figures show that it "continues to recover somewhat from its toughest days." The company is "still not growing enormously in smartphones, but the Galaxy S7 really seems to have helped stabilize things and improve its margins. This was the first quarter in almost two years in which mobile rather than semiconductors were the biggest contributor to margins, and that's something of a milestone in the recovery of the mobile business."

Samsung's latest Galaxy S7 Edge and S7 handsets, which debuted March 11, are water-resistant and are powered by Qualcomm quad-core 2.15GHz/1.6GHz processors for U.S. users and include 4GB of LPDDR4 memory, 32GB of built-in storage, microSD expansion slots, a 12-megapixel dual-pixel rear camera and a 5-megapixel front-facing camera. The Galaxy S7 Edge features a 5.5-inch quad-HD Super AMOLED display and a screen that wraps around both right and left edges of the device, while the Galaxy S7 has a 5.1-inch quad-HD Super AMOLED display.


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