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Samsung phone sales drop 14%, profit drops 30%

updated 11:30 pm EDT, Thu April 28, 2011

Samsung Q1 2011 shows big drop in phone sales

Samsung saw a rare downturn in its mobile business after posting results for the winter. The Korean company's phone sales sank 14 percent year over year to 70 million devices. Most of its comfort was from its greater dependence on smartphones, which went from just four percent of Samsung's phone mix to 18 percent and helped it make about $1.34 billion in operating profit from the one group.

Outlook for the spring was mixed and showed an uncharacteristic level of doubt. Samsung was launching its two most important halo devices in the season, the Galaxy S II smartphone and Galaxy Tab 10.1 tablet, and expected to "outperform" the single-digit growth of the market. The company still saw a "challenging" road ahead and singled out "tight competition" in mobile.

Samsung's profits as a whole were down 30 percent to $2.6 billion and partly showed the impact of Apple's iPad on its performance. Its memory division grew its revenue just five percent, to $5.48 billion, as slow traditional PC sales cut its ability to sell RAM. The drop would have been worse if not for an offset from mobile RAM and flash used in smartphones and tablets. Samsung uses its own memory for its phones, but Apple is still its largest customer and uses flash across nearly its entire range.

Most of the severe impact came from its display business, which lost $214.85 million and shipped eight percent fewer LCDs for TVs, computers, and other typical screens. Performance would again have been lower were it not for tablets which, along with LED-lit LCD TVs, grew by about 30 percent. Apple is widely recognized as sourcing some of its iPad display production to Samsung and would have played a significant role.

Samsung's phone shipment drop could cost it valuable share in the market. It has often been second only to Nokia in the cellphone market but could see that jeopardized in the long term. LG also saw rough performance in the winter, but Apple, HTC, and other smartphone-first designers have been growing quickly.



By Electronista Staff
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Comments

  1. Paul Huang

    Dedicated MacNNer

    Joined: Sep 1999

    +8

    The worst UI I have encountered are designed by Sa

    I have had StupidPhone-rage twice. Both involved Samsung phones. I smashed one and snapped the other in half and tossed it out of my car while it was traveling at 90MPH.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +6

    2011 - the year the Android bubble bursts.

    Samsung's problems don't just help Apple. They also help other Android handset makers, who are all trying to kill each other in the race to be #2 behind Apple. And that would be a very, very distant #2.

    Google's crackdown on rampant noodling with their OS will heighten the pressure. With no software differentiation, the handset makers will be forced to ship generic cookie-cutter copies of copies of copies. This will force them to compete on price alone. They will cut costs and try to push each other off the low-margin cliff just like the Acers and Dells of the world do in the Windows pee cee world.

    Good riddance. Last one to the bottom wins.

  1. facebook_Clarence

    Via Facebook

    Joined: Apr 2011

    -8

    Bubble

    I wasn't aware Android had a bubble. I also don't see this cost cutting you're speaking of. Please be more realistic in your predictions.

  1. krb

    Fresh-Faced Recruit

    Joined: Jun 2000

    +7

    No surprise

    My wife tried a Samsuck phone when I got my iPhone - she took it back within 30 days and got an iPhone too.

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