Samsung Handset Sales Up, But Expects Slowdown - InformationWeek

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Samsung Handset Sales Up, But Expects Slowdown

Citing the worldwide economic slowdown and increased competition, Samsung said it anticipated tough business months ahead.

Samsung Electronics on Friday reported second-quarter profits jumped 51%, driven in large part by a surge in mobile phone shipments, but the company's stock dropped on concerns for the remainder of the year.

The diversified company posted earnings of $2.12 billion on sales of $18 billion.

Samsung continued to record strong results in its handset operation as it sold 45.7 million handsets in the quarter -- 22% higher than the same period in the previous year. The company has been capturing more market share in recent quarters, primarily at the expense of Motorola. Samsung is now firmly in second place behind Nokia in worldwide shipments of handsets.

Citing the worldwide economic slowdown and increased competition, Samsung said it anticipated tough business months ahead.

"We posted very strong results," said investor relations executive Chu Woosik, according to media reports. But "it's unlikely that we will be achieving a sharp recovery [in the next quarter]." Samsung stock was down about 4% in early trading on Friday.

Handset sales were a bright spot for Samsung as the company reported total handset sales of 92 million for the first two quarters; that represented a 20% increase from the same period in the previous year.

In recent months, Samsung's Instinct smartphone has taken off like a rocket for Sprint, which reported that more units of the smartphone were sold in one week for EV-DO users than any other phone in that category.

Samsung, which is also the largest maker of DRAM memory chips, said it expects the sector to remain challenged in the coming months, following the second quarter's 5.9% operating profit margin. Samsung has been upgrading the equipment in its memory unit.

Earlier this month, Samsung began mass production of 128-GB solid-state drives; the company also said it plans to begin production of 256-GB solid-state drives by the end of this year.

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