Samsung clings to smartphones as bright spot in Q1

Samsung Electronics saw its company-wide profit drop 30 percent in the first quarter, but the electronics conglomerate was buoyed by strong smartphone sales, continuing a trend from the fourth quarter of 2010.

Stats samsung first quarter telecommunications

Click here for key stats on Samsung's first quarter.

On a company-wide basis, Samsung's profit fell to $2.6 billion, down from $3.74 billion in the year-ago period. However, overall sales were up 7 percent year-over-year to $34.5 billion. Despite weakness in some of its other businesses, such as flat-panel TVs, Samsung's mobile business remained robust during the period.

In Samsung's telecommunications business--which includes both handsets and wireless network equipment--the company reported an operating profit of $1.33 billion, up from $1.03 billion in the year-ago period. Operating margin in the unit rose from 12.2 percent to 13.5 percent. Samsung said sales in its handset business jumped 18 percent year-over-year to $9.48 billion.

Samsung shipped a total of 70 million units in the quarter, up 9 percent from the year-ago period. The company said that fully 18 percent of its handset shipments in the quarter were smartphones, up from 4 percent in the year-ago quarter--an indication of how much emphasis Samsung has put on the high-end market in the past year. Samsung said its average selling price, which it did not disclose, increased in the quarter due to a higher-end product mix.

For the second quarter, Samsung said it expects the overall handset market to grow in the single-digit percentages sequentially. The company expects product and price competition to intensify in the tablet market. Samsung said it expects to outpace growth in the handset market in the second quarter due to the introduction of new models, including the Galaxy S II, which will be launched by 140 carriers in 120 countries. Samsung also said it will expand its tablet portfolio with the release of a thinner version of the Samsung GalaxyTab 10.1.

In a bit of related news, Samsung also stepped up its legal action against Apple (NASDAQ:AAPL) by suing the company in the U.S. District Court in San Jose, Calif. Samsung accused Apple of violating 10 patents related to mobile technology and design. At a news conference in South Korea Thursday, J.K. Shin, the president of Samsung's mobile communications business, said Samsung would defend its patents and "protect its pride." 

For more:
- see this release
- see this WSJ article (sub req.)
- see this Bloomberg article
- see this WSJ article on Samsung-Apple (sub. req.)

Special Report: FierceWireless Q1 earnings page

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