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Q3 reports are out.. Things can’t be good for all

Sunday, November 7, 2010
The second largest cell phone manufacturer in the world just published its Q3 results and things are looking pretty good. Samsung continue to gain pace and have moved another step forward in their plan to become Numero Uno. In Q3 the sales of the mobile division have increased by 16% to 9.9 billion dollars, while net profit rose by 0.3% to reach 1 billion dollars compared to the same period of last year.
During the past three months Samsung sold 71.4 million handsets, giving them a market share of just over 22% (it was 20.8% in Q3 of 2009). While, in comparison, for Q3 of 2009 Samsung only pushed 60.8 million mobile phones. The average selling price of the Samsung mobile phones has also increased by 14% over the previous quarter up to 122 dollars.

The great success of the Samsung Galaxy S family and the Samsung Wave are part of the explanation for the success. In general the share of smartphones among all shipped Samsung mobiles is 11 percent (compared to only 2 percent in Q3 of 2009). Samsung expects the smartphone competition to intensify in Q4 as most companies will launch key products in that period. However the Koreans expect to outperform the market once again and increase their market share even further.

And since we're still in Korea, unlike their neighbors from Samsung, the third quarter of the financial year wasn't particularly successful for the second largest Korean conglomerate LG. The profit they recorded stands at just over the measly 7 million dollars, which is a 99% decrease as compared to the 810 million they scored in the same quarter last year. Still any profit is better than loss so it's not all bad.
Unfortunately, the same cannot be said for the Mobile division which lost some 270 million dollars, which makes it the worst performer of all LG businesses. Over the past three months shipments were down by 7% QoQ to a total of 28.4 million units and revenue fell to 2.64 billion dollars, which is nearly 12% down from Q2 2010.

The results look even worse when compared to Q3 of 2009 with the revenue slipping by 31.9 percent. LG quotes the weak demand in Europe and the continuous increase in smartphone demand (where they cannot compete quite well recently) as the reasons for their recent troubles. The reduction of the average selling price of their devices, due to poor performance in developed markets and investments in R&D are also mentioned. However LG expect mobile phone shipments to increase by 13 percent in the holiday quarter of this year so they obviously expect to lose some further market share. Their place as the world's third largest manufacturer is safe for now though.

It seems that the last three months were good for those recovering cell phone manufacturers… First we had Sony Ericsson, and now Motorola.
Moto's mobile phone department has been struggling as of late, to the point where it's on its way to be splintered off. But this Q3, Motorola Mobility has posted its first profit in three years as it shipped 9.1 million handsets, 3.8 million of which were smartphones. Mobile devices accounted for 2 billion dollars of sales (a sizable chunk of the 4.7 billion dollars for the company as a whole). Just over 900 million of that came from the US market - a 5% increase compared to last year's third quarter. Well, about the actual profits.. the net earnings for Motorola as a whole reached 109 million dollars (almost 10 times the 12 millions for Q3 of 2009). Whilst the earnings for Motorola Mobility were only 3 million dollars which is a very thin profit margin indeed, but it’s profit nonetheless and when compared to the 183 million dollars loss in Q3 2009, it's a huge improvement.

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