Samsung Reports Record Earnings While HTC Slips

Taiwan-based HTC announced its third consecutive quarter of losses on 6 July, while Samsung announced record earnings.

HTC’s second-quarter net income was down 58 percent from a year earlier, to $247 million (£159m), by Bloomberg’s calculations.

Patent disputes

Apple’s patent disputes with the company played a part in its damaged income; smartphones were stuck for a time in US Customs, as the phone makers battled in court. More at fault, however, was HTC’s inability to compete against the Apple iPhone and Samsung’s Galaxy line of smartphones in the United States.

HTC was an early Android supporter and enjoyed a strong response, in 2010, to its Evo 4G – at the time, the phone’s launch was Sprint’s most successful ever. When HTC launched the Droid Incredible, analysts conceded that HTC had gone from the edge to the cutting edge – though added that it would be interesting to see how the next year played out.

The year, alas, sent HTC back to the edge of the market, as Samsung’s Galaxy lineup gained momentum.

In April, HTC chief executive Peter Chou told investors that, due to the steep competition the company faced in the United States, it planned to shift its focus to the European and Asian markets.

“New models which are tailored for China have helped it continue boosting sales in the world’s largest mobile phone market,” Bloomberg reported on 6 July, citing the firm SINO-MR. The firm added that in China HTC could face “severe price competition”, as its low-end models lack some of the functionality of its competitors’ low-end devices.

Samsung, meanwhile, on 6 July released sales estimates for its second quarter that set a new record for profits. Second-quarter profits were up nearly 80 percent from a year earlier. Analysts, the Associated Press reported, say the “sharp rise” came, thanks to Samsung’s Galaxy smartphones.

Phone growth

In late June, JK Shin, head of Samsung’s mobile division, pointed to as much, saying that sales of the Galaxy S III were expected to reach 10 million units in July.

“We’re getting far better reviews on the S III than we did with its predecessors globally… and supply simply can’t meet soaring demand,” Shin told reporters, adding that second-quarter results were likely to exceed Samsung’s also-excellent first quarter.

The US launch of the Galaxy S III followed debuts in 28 countries, and supplies have been slow to arrive. Sprint pushed back its launch by 10 days, T-Mobile launched with only 16GB models in stock, and AT&T, Verizon Wireless and US Cellular were coy about their launch dates, only announcing them once it was clear they’d have supplies in hand to sell.

Because of the delays, analysts lowered second-quarter earnings for Samsung and boosted third-quarter estimates.

The Galaxy S III is an unusual phone in many respects – a standout in a market at pains to differentiate Android-running devices. Still, Samsung’s earning growth, according to Bloomberg, was driven not only by sales of its own phones but – thanks to its chip and display businesses – by the devices of its competitors as well.

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