Samsung again posted massive quarterly profits driven largely by the company's smartphone sales, but the company's warnings about increasing competition and a short-term slowdown in demand dampened its overall tone. Samsung shipped 70.7 million smartphones in the first quarter, according to research firm IDC, giving the company a market-leading 32.7 percent share in the period.
Overall, Samsung reported $6.4 billion in net profit overall, way up from the $4.5 billion in the same quarter a year ago. Sales of phones and network equipment accounted for 74 percent of Samsung's operating profit in the first quarter, according to the Wall Street Journal, and that business' operating-profit margin rose to 19.8 percent in the first quarter from 18.6 percent in the year-ago quarter.
Samsung specifically pointed to strong sales of the Galaxy Note II and the Galaxy S III during the first quarter. Further, Samsung in the coming weeks plans to begin selling its Galaxy S4 flagship smartphone, which the company is hoping will be a smash hit with consumers across the globe.
Despite the positive figures, Samsung sounded cautionary notes about sales for the upcoming second quarter.
"We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market," said Robert Yi, Samsung's head of investor relations, in a statement.
"Looking ahead, Samsung anticipates smartphone sales to stay flat in the second quarter but will pick up again in the second half of the year. As more mid- to low-end mobile devices enter the market and new premium products are rolled out, the race for market share will intensify," the company said in its earnings release. "The company will strive to remain competitive amid difficult conditions by expanding the lineup of smartphones and tablets this year, starting with Galaxy Note 8.0 and the flagship Galaxy S4 smartphone."
Although Samsung no longer provides sales figures for its phones, IDC estimated the company's share of the smartphone market grew from 28.8 percent in the first quarter of last year to 32.7 percent this year. "By the end of 1Q13, Samsung shipped more units than the next four vendors combined," IDC noted.
Overall, IDC reported that vendors shipped 216.2 million smartphones in the first quarter, which the firm said marked the first time that more than half (51.6 percent) the total phone shipments in a quarter were smartphones. Click here for more on this story.
As for the slight delay in the rollout of Samsung's Galaxy S4 in the United States, the company said it is not suffering from major component supply issues for the phone.
"We have secured key components well in advance but temporarily experiencing supply problems due to stronger-than-expected initial supply request. We expect the bottleneck to be resolved soon," said Kim Hyun-joon, VP of Samsung's mobile business, according to Reuters.
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