Samsung Announcement Claims Strong Earnings for Q3 2013

Samsung released news of very strong earnings for Q3 2013 on Friday, October 4, 2013. The strong earnings include an 18+% improvement in operating profit to approximately $9.4Billion on sales of $53.9Billion. While a number of industry commentators have offered opinions as to the ratio between smartphone sales and these numbers, there is neither mention of specific product groups, nor any detail about their respective contributions to this quarterly performance.

Regardless of how the numbers break out by product segment, simply a quick read of this release should illustrate, for anyone with an interest, the sheer difference in scale between this global manufacturer with a highly diversified product line and Apple.

Remove iPhone sales from Apple’s balance sheet and reflect on an entirely different business, with substantially less impact on the economy. In Q3 2013, Apple’s gross revenues from Mac computers were a mere 26.95% of iPhone sales. When iPad sales are added to the iPhone totals, then revenues from Mac computers amount to less than 20% of total business revenue. How can anyone claim, based on these numbers, today’s Apple to have much of anything to do with the original Apple back in the 1980s?

In contrast, Samsung is a highly diversified business with formidable positions in a wide range of consumer electronic commodity markets, of which smart phones and tablets are simply two. A quick look at their Q2 2013 Earnings release show roughly the same proportions between their CE (consumer electronics) (principally televisions, music players and related products) and their IM (IT and Mobile communications products) as is the case for Apple; the CE component adds an additional 20% (approx) to revenues. But there is yet a third component, DS (Device Solutions including Semiconductors and Display Panels), which adds an additional 45-50% (approx) to the revenue total.

So I remain very skeptical of the analyst hyperbole around Apple. I’m firmly in the camp of disbelievers and look forward to Samsung’s release at the end of the month to get a better picture of their sales by products, and, of even more importance, their performance results for smart phone and tablet sales in emerging markets, where I’m of the opinon Apple has given most of the market away to competitors.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

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