Samsung ships 51.8m phones as prices fall

Samsung today reported poorer than expected results for its summer quarter that included mixed results for its cellphone business. Although revenue for the Korean company climbed by 15 percent year over year to the equivalent of $13.8 billion in the July-to-September period, the company's actual earnings were nearly cut in half to about $924 million. The fall was triggered by a steep drop in the company's profit margins as the cost of upgrading its chipmaking factories, a chip oversupply, and heated competition in HDTVs and Samsung's other home electronics all pushed Samsung to either lower prices or raise expenses.

The company's cellphone business was also affected by the margin squeeze. Phone shipments jumped 22.6 percent to a full 51.8 million devices over the past year, but margins sank from 12.8 percent in summer 2007 to just 9.5 percent today as the electronics giant shifted increasingly towards lower-cost phones in its lineup outside of Korea.

According to Nokia estimates for world share, the shipments would give Samsung about 16.7 percent of the market, or less than half Nokia's share but significantly more than other large-scale manufacturers such as Sony Ericsson, which lost share and have half or less of Samsung's total phone shipments.

The emphasis on budget phones nonetheless creates problems for the company, which has increasingly focused its attention on high-end touchscreen and media phones such as the Omnia, Pixon and Soul. These are more profitable but have faced stiff competition from the iPhone 3G in areas where both companies sell their products, and has also had to contend with similar offerings from LG.

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