Samsung Electronics Ltd. has released its first-quarter financial results for 2017, and while the company posted revenue increases thanks to strong component sales, its mobile division’s revenue dropped as a result of the Galaxy S8’s delayed launch and what the company called a “price adjustment” of the Galaxy S7 and S7 Edge.
Overall, the South Korean tech giant’s quarterly operating profit was 9.9 trillion won (approximately $11.9 billion Canadian), representing a year-over-year increase of 3.2 trillion won (approximately $3.847 billion Canadian), thanks to its components division’s improved profitability.
Lee Kyeong-Tae, Samsung’s vice-president of IT and mobile business, was quick to note that in addition to lowered prices for the S7 and S7 Edge, and despite what he called “weakened seasonal demand” for smartphones and tablets, Samsung’s smartphone shipment numbers increased slightly quarter-over-quarter, thanks to the newly released Galaxy S8 and “solid sales of mass smartphones in emerging markets,” while its revenues received a boost from the company’s infrastructure efforts.
“Ever since we opened the Galaxy S8 and S8 Plus to the public, they are… associated [with] credibility in the market and highly praised for their superiority,” he said during Samsung’s April 26 earnings call.
However, the company does not expect smartphone shipment numbers to rise next quarter, despite the release of the Galaxy S8 and S8-plus, due to decreased sales other models including the Galaxy A and J series, neither of which are available in North America, Lee said, noting also that while market demand for smartphones is expected to increase year-over-year throughout 2017, the number of competitors could have a negative impact.
“We aim to increase our shipment and revenue [year-over-year] and improve our profit [year-over-year] by maximizing sales of the Galaxy S8 and S8 Plus, by successfully launching a new flagship smartphone in the second half of 2017, and by maintaining the flagship stability of mass smartphone [sic],” he said.
That said, the company also plans to increase its annual revenue with new business opportunities in the growing LTE and Internet of Things (IoT) markets, and by preparing for 5G wireless broadband services, he added.
Later, when Korea Investment and Securities analyst Yoo Jong Woo suggested that a delay in the Galaxy S8’s release, combined with strong demand, might have created a “supply bottleneck,” an unidentified Samsung representative assured listeners there was no such thing, and that while it would be “difficult” for the company to provide a sales target for the S8 and S8 Plus, it would be “exerting our best effort to record the best sales,” according to the representative.
Unmentioned was any potential impact of the explosion-prone Galaxy Note 7’s mass recall on mobile device sales, or of chair Lee Jae-yong, known professionally as Jay Y. Lee, who is currently on trial in a high-profile graft scandal that recently led to the impeachment of South Korea’s former president.
Our thanks to investment research platform Seeking Alpha for the transcriptions from Samsung’s April 26 earnings call.
