Samsung Smartphone Production Peaks
Financial results from Samsung are curious. Sales rose 21%, and their operating profit is up 48%. Their stock, naturally, dropped 14%. It’s good to know that investors are not just crazy about Apple’s numbers.
Samsung did announce something rather curious though. They noted that the smartphone market has peaked (a market that’s responsible for two-thirds of the profit), the profits in this division are flat, and Samsung is using its cash to invest in manufacturing memory chips and OLED screens. While these divisions are profitable, they’re certainly not as profitable, and thus the stock price got punished.
Keeping in mind that iPhone sales continue to grow, even as Apple has not yet really addressed the cheaper smartphone market, the next year should be interesting. iPhone 4 sales have been doing well in growth markets, but the iPhone 4 is not that much cheaper compared to the 5. Should Apple attack the lower-end market with a dedicated phone, Samsung’s smartphone business is likely to be severely hurt by this time next year.