Samsung, Even Without Galaxy S 4, Grew Q1 Profits

Samsung in the first quarter showed the benefits of having mid-tier phones to buoy a company ahead of a major launch.

Samsung, even without the benefit of its newest flagship smartphone, the Galaxy S 4, brought in near-record earnings during its 2013 first quarter.

Ahead of the company's full earnings announcement, Samsung officials shared April 5 that operating profit during the quarter rose to about $7.7 billion in the three months ending March 31, up from $5 billion during the fourth quarter of 2012.

Consolidated sales were about $45.3 billion, up from about $39.9 billion the quarter before.

Handsets were again the biggest money maker in Samsung's extensive business, Bloomberg reported April 5, citing Meritz Securities' Seoul-based analyst Lee Si Cheol. The analyst said that the Galaxy S III was still selling well, as were the mini Galaxy models in emerging markets such as China, Brazil and India.

Five analysts interviewed by Reuters estimated that Samsung shipped between 68 million and 70 million phones, up from 63 million during the December quarter.

That Samsung should continue its forward momentum with a nearly year-old flagship product is a tremendous accomplishment, particularly considering that ahead of the Apple iPhone 5's release, the Galaxy S III was able to outsell the iPhone 4 S and become the best-selling smartphone during the third quarter of 2012.

The gain likely came, thanks to "increasing sales of mid-tier products on top of the usual solid sales of its flagship models of the Galaxy S and Note," NH Investment & Securities analyst Lee Sun-tae told Reuters.

The same Reuters analysts said that Apple likely shipped 30 million iPhones during the quarter, down from the 47.8 million it shipped during the holiday-timed fourth quarter of 2012.

It's rumored that Apple will take a lesson from Samsung and this summer introduce a less expensive version of the iPhone to sell prepaid in developing markets—a necessary move if it's to keep pace with its fast-growing rival.

On March 14, Samsung introduced the Galaxy S 4 in New York City, making it the first Galaxy S device to be unveiled in the United States. If this decision was meant to symbolize Samsung's desire to dominate the U.S. market and Apple's home turf, that message was lost on no one.

The S 4 is thinner and lighter than its predecessor, is almost exactly as tall and wide, but features a 5-inch display instead of a 4.8-inch one. It has an eight-core processor, a 13-megaxel camera and a long list of features never before offered on a device—such as the ability to watch a user's eyes and a scroll page as necessary and the ability to record sound to accompany photos.

There's little doubt that Samsung's second quarter will explode past its first.

Ken Hyers, an analyst with Strategy Analytics, told eWEEK that he found the S 4 "really nice and innovative, but not as nice or innovative as it could have been." Nonetheless, he expects it will "shatter sales figures set by the S III."

AT&T and U.S. Cellular have announced that they'll begin accepting preorders for the Galaxy S 4 April 16, and T-Mobile has said it will begin selling the phone May 1. Verizon Wireless and Sprint have also committed to selling it.