Samsung Says It's Making More Money Than Apple, Now

Riding the wave of gadget goodness from the Consumer Electronics Show in Las Vegas, Samsung released a pretty impressive set of fourth quarter earnings estimates, including a record high profit. The South Korean electronics manufacturer says that it will make $8.3 billion in profits on $52.7 billion in revenue. That's a shade better than Apple's own record high profit of $8.2 billion on just $32 billion. Now, we could all day about the devilish details in the earnings reports and differences between the two companies revenue streams, but one things is brutally clear: Samsung is making more money than Apple, now. At least if its estimates are correct, they are.
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Tim Cook and company can't be thrilled about this news. Apple's very publicly struggled with Samsung's roaring success in the smartphone business, so much so that it has peppered its competitor with patent litigation lawsuits around the world in an attempt to get its products pulled from shelves. Though Apple won a big decision in the United States last fall, Samsung's been doing pretty well in the appeals process, and it's increasingly looking like Apple will not have its ban.
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Meanwhile, Samsung is still knocking the socks off of consumers. Just hours before releasing the glowing Q4 earnings estimates, the company pulled back the curtain on some pretty mind-boggling new TVs that will probably cost as much as a car but also shows that they're on the right side of the innovation curve. That would be the lucrative side.

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Samsung sees record-high 4Q profit

SEOUL, South Korea (AP) — Samsung Electronics Co., the world's largest technology company by revenue, expects record earnings for the fourth quarter of 2012 as shoppers continued to snap up its smartphones and tablets.
The company said Tuesday its operating profit for the October-December quarter would be about 8.8 trillion won ($8.3 billion), up 89 percent from a year earlier and higher than expectations. It will release its full quarterly result including net profit at the end of this month.
The maker of Galaxy smartphones and tablets said fourth quarter revenue likely rose 18 percent from a year earlier to 56 trillion won.
Analysts said nearly 70 percent of the operating income for the quarter was likely generated by Samsung's mobile division that makes and sells smartphones and tablets.
Samsung's mobile business, which recently overtook Apple in smartphone sales and Nokia in mobile handsets, has driven Samsung's earnings growth in recent quarters. Samsung's quarterly operating profit has risen steadily since the final quarter of 2011, while rival mobile-phone makers such as Nokia, Research In Motion and HTC have experienced falling market share and profits.
Samsung shipped at least 60 million smartphones in the last quarter of 2012, according to analysts' estimates, about 10 percent growth from the previous quarter.
The launch in September of the Galaxy Note II, a giant smartphone with a 5.5-inch screen and a digital pen, helped Samsung retain its market dominance during the Christmas holiday season despite competition from Apple's iPhone 5, analysts said. Samsung's flagship Android device, the Galaxy S III, also sold strongly.
Jin Sung-hye, an analyst at KTB Securities, estimated Samsung shipped 15 million S III smartphones and 7 million of the Note II during the final three months of 2012. The surprise popularity of the Note II device prompted other handset makers to increase the screen size of their smartphones as consumers embrace a wider mobile-phone screen to watch videos.
Market watchers speculate that Samsung will introduce a new Galaxy S smartphone, likely to be named the Galaxy S IV, before the end of April. Samsung usually rolls out the latest iteration of its Android-based flagship smartphone before the end of the second quarter, taking advantage of the time when rivals are months away from introducing new smartphone models.
With the early rollouts of the new Galaxy S model and an update to the Note series later in the year, analysts predict Samsung will sell at least 300 million smartphones in 2013, widening its lead over Apple. Samsung's smartphone shipments likely surpassed 200 million for the first time in 2012.
The company plans to act more aggressively to increase its share of the tablet PC market this year, which is still dominated by Apple's iPad, its executives said in an October conference call. The release of mini tablets that are between the size of smartphones and standard tablets also opens up a new growth area for Samsung.
While the mobile phone division has replaced Samsung's semiconductor business as the biggest profit generator, robust demand for smartphones around the world is benefiting Samsung's semiconductor operation as well. The company is the world's largest supplier of TVs and memory chips.
Analysts said Samsung's semiconductor division fared better in the last quarter than the quarter before as higher Samsung phone sales and launches of new mobile products by its customers lifted demand for Samsung's mobile processors.
In the first quarter of this year, market watchers said the strengthening of the South Korean currency against the U.S. dollar and the Japanese yen could hurt Samsung's component businesses, which is facing seasonally weak demand for TVs and display panels. But others predict Samsung will ship more smartphones than the previous quarter, which could outweigh lower TV and panel sales.
The South Korean company has been in global legal battles with Apple, one of its biggest clients, for nearly two years. Last month, Samsung dropped its bid to seek a sales ban against Apple's mobile products in Europe, saying it would like to protect consumer choice. Samsung, which is under investigations by the European Commission over its practice of licensing key mobile patents, is maintaining its lawsuits against the iPhone maker in other countries.
Shares of Samsung Electronics fell 1 percent in Seoul after earnings release. Samsung's shares, which gained 11 percent in the fourth quarter, hit a record high level earlier this month.
If Samsung's fourth quarter results are in line with Tuesday's guidance, the company will report 29 trillion won ($27.3 billion) operating profit on revenue of 201.1 trillion won ($189 billion) for 2012.

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Asia stocks down ahead of US corporate earnings

 Asian stock markets headed lower Tuesday as investors turned cautious before U.S. earnings season kicks off this week.
Investors will get a feel for corporate America's outlook as earnings reports start coming. Aluminum producer Alcoa Inc. will unofficially launch the reporting season for the fourth quarter of 2012 on Tuesday after U.S. markets close.
Events during the quarter such as Superstorm Sandy, the presidential election, and worries about the narrowly avoided "fiscal cliff" could lead to some unexpected results.
Japan's Nikkei 225 index tumbled 1.1 percent to 10,477.14 as the yen crept upward against the U.S. dollar. The rebound in the yen led some investors to sell export shares that had surged as the currency weakened in recent weeks. Toyota Motor Corp. fell 2.3 percent while Mazda Motor Corp. plunged 5 percent. Nintendo Co. shed 3 percent.
Hong Kong's Hang Seng fell 0.5 percent to 23,223.12. South Korea's Kospi lost 0.6 percent to 1,999.92. Benchmarks in Singapore, Taiwan and Thailand fell, while Indonesia and the Philippines rose. Mainland Chinese shares were mixed.
Australia's S&P/ASX 200 shed 0.6 percent to 4,690.80. That came as the government announced the country's trade deficit widened in November and a report by the Australian Industry Group and the Housing Industry Association showed the country's construction industry slowing for the 31st consecutive month.
"Investors are taking a wait-and-see attitude," said Evan Lucas, strategist at IG Markets in Melbourne, adding that many investors went for profits ahead of the release Wednesday of weekly jobless claims in the U.S. and the European Central Bank's rate-setting meeting Thursday.
"A lot of eyes are watching what will happen in Europe and America over the next couple of days," he said. Another closely watched development will be the Bank of England's monthly announcement on its key interest rate, due Thursday.
Major indexes surged last week after U.S. lawmakers passed a bill to avoid a combination of government spending cuts and tax increases that have come to be known as the fiscal cliff. The deal, however, remains incomplete. Politicians will face another deadline in two months to agree on more spending cuts.
"The looming budget battle in the US has also prompted some hesitancy to buy risk assets," said analysts at Credit Agricole CIB in Hong Kong.
Stocks in the U.S. closed down Monday from the five-year high it reached last week as investors shifted their focus to corporate profits. The Dow Jones industrial average fell 0.4 percent to 13,384.29. The Standard & Poor's 500 index fell 0.3 percent to 1,461.89. The Nasdaq composite index fell less than 0.1 percent to 3,098.81.
Benchmark crude oil contract for February delivery was up 1 cent to $93.20 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 10 cents to close at $93.19 a barrel on the Nymex on Monday.
In currencies, the euro rose to $1.3122 from $1.3112 in New York late Monday. The dollar fell to 87.44 yen from 87.84 yen.

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5 die in plane crash in French Alps

PARIS (AP) — Police say five people have died after their plane crashed shortly after taking off from an airport in the French Alps.
The plane crashed in a forest in an uninhabited area outside Grenoble, a city that is the gateway to the mountain resorts of the Alps in southeastern France.
An official with the French gendarmerie said the plane crashed Saturday shortly after it took off from Grenoble's airport. Everyone aboard died. It was not clear what kind of plane they were flying. The identities of the victims were not immediately known.
The official would only give the information on condition of anonymity because of police rules.

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Family of 5 dies in plane crash near French Alps

PARIS (AP) — A Moroccan family of five returning home died Saturday when their plane crashed shortly after takeoff from an airport near the French Alps, officials said.
The twin-engine plane hit a hill and crashed in a forest in an uninhabited area outside Grenoble, a city that is the gateway to the Alpine resorts in southeastern France.
Bruno Charlot, a local government official, said all five aboard died. The pilot was flying his wife and their three children home to Morocco, apparently after a vacation in France.
The plane took off Saturday afternoon from Grenoble's airport and quickly disappeared off the radar. Charlot said the weather was clear, and an investigation is under way to determine the cause of the crash.
The crash caused a small fire that extinguished itself even before responders arrived on the scene. No one was hurt on the ground.

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6 Russians die in snowmobile crash in Italy

ROME (AP) — Six Russians were killed and two seriously injured when the snowmobile and sled they were riding veered off an Italian Alpine ski slope at night, slammed into a barrier and flew through the air into a ravine.
The accident occurred Friday, and when rescuers arrived at the scene six of the victims were found dead on the slope of Mount Cermis, in the Trentino-Alto Adige region of northeast Italy, said Cavalese Fire Department Cmdr. Roberto Marchi.
"It is clear that the fundamental cause is recklessness and imprudence," Marchi told Sky TG24 TV in an interview on the slope Saturday. It is labeled "pista nera" or the black ski run, indicating a level of steepness and other difficult conditions suitable only for the most experienced skiers.
Six of the people involved in the accident were Russian tourists and the other two were Russians who worked in Italy in the tourist industry.
Cavalese Mayor Silvano Welponer said that putting a driver and passenger in the snowmobile and having it pull six passengers in the sled "made for a very heavy load. You have to know what you are doing and have the experience" to safely handle that, he said.
The ANSA news agency said authorities were performing tests to determine if the snowmobile's driver — who survived the crash — was drunk.
The sled-towing snowmobile cut a spectacular trajectory after it veered off the slope on a curve, hit the manmade barrier, flew through the air while shearing the tips off tree branches, then landed in the ravine, Italian news reports said.
RAI state radio said the slope was unlit, and other Italian news reports quoted local officials as saying it had been closed for the day and that the only vehicles allowed on it when it is open are staff or rescue ones. The Russians were believed to have dined at the top of the slopes and were heading back to their hotel when they crashed, the reports said.
The Russian consul general in Milan, Alexei Parmonov, said on Russian state television that he was in contact with Italian investigators, who he said suspect the crash was caused by excessive speed. They also were checking the possibility of a mechanical malfunction.
Italian prosecutors formally opened a probe to see if manslaughter charges should be filed, Italian news reports said.
Parmonov identified the four men and two women who died in the crash. Five of them and also one of the injured men were tourists from Krasnodar, a region in southern Russia that includes Sochi, which is preparing to hold the 2014 Winter Olympics. One of the dead women and the other injured man worked in Italy in the tourist industry.
The Russian diplomat identified the dead as Denis Kravchenko, Irina Kravchenko, Vyacheslav Sleptsov, Yulia Yudina, Lyudmila Yudina and Rafilya Pshenichnaya. The injured, he said, were Boris Yudin and Azat Agafarov. All except Pshenichnaya and Agafarov were tourists from Krasnodar. Yudin's 17-year-old son, who stayed behind in the hotel, lost his mother and sister in the accident, while his father was hospitalized with multiple fractures, Parmonov said.
A day of entertainment had been planned for the Val di Fiemme ski resort area Saturday, ahead of the World Cup cross-country ski competition, but the festivities were canceled because of the accident.
Two high-profile deadly accidents have occurred on Mount Cermis.
In 1998, a U.S. Marine jet, flying low on a training run from a nearby air base, sliced a ski gondola's cable, sending the cable car crashing to the ground and claiming 20 lives. The accident triggered months of tension between Italy and the United States, two traditionally good allies.
In 1976, a ski gondola broke off from its cable and plunged to the slope, killing 42 people.

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Eli Lilly banks on cost controls for higher 2013 profit

(Reuters) - Eli Lilly and Co said on Friday it expects profit in 2013 to increase by more than Wall Street had been forecasting, primarily due to cost controls and improved productivity.
Lilly, whose shares were up nearly 4 percent on Friday, said 2013 sales will be flat to a bit higher, despite the loss of patent on its $5 billion-a-year antidepressant, Cymbalta, in December.
The Indianapolis-based drugmaker is coming off a particularly difficult 2012 when sales declined sharply because of competition from cheaper generics.
It expects 2013 earnings to increase to $3.75 to $3.90 per share excluding items, from a forecast of $3.30 to $3.40 per share in 2012. In 2011, its adjusted earnings were $4.41 per share.
Analysts on average forecast earnings of $3.71 for 2013 and $3.36 per share for 2012, according to Thomson Reuters I/B/E/S.
"Overall, it was better than anyone expected," said Barclays Capital analyst Tony Butler. "From an earnings perspective, no one believed that operating expenses would be kept in check."
Morningstar analyst Damien Conover said, "They're cutting costs at a pace that's maybe a little quicker than people were anticipating, and that was one of the reasons for the outperformance in their guidance."
The company said 2013 net profit would benefit from a tax credit that had been pushed into this year because of the late signing of the American Taxpayer Relief Act of 2012 - the legislation that prevented the so-called fiscal cliff.
The company said it is not sure yet of the amount of the tax credit, which is related to research and development accounting, and said it would provide more information during its January 29 earnings conference call. Lilly said it excluded the impact from all of its financial guidance.
Similar uncertainty could face other drugmakers, as well as other corporate sectors with extensive research budgets, such as technology and defense. However, "It could be resolved by the time everybody else reports," Butler said of the pharmaceutical industry. "We've got another three weeks before anyone reports."
Lilly said the adjusted earnings forecast also excludes payment and income for revenue sharing with Bristol-Myers Squibb Co's Amylin unit on Byetta, a diabetes drug, and restructuring charges. Lilly severed ties with Amylin when it agreed to collaborate with Boehringer Ingelheim on diabetes drug development.
HELP ON THE WAY
Lilly forecast 2013 revenue of $22.6 billion to $23.4 billion, driven by sales of its drugs for diabetes, osteoporosis, cancer, erectile dysfunction and animal health. The company said it also expects significant revenue growth from Japan and emerging markets, such as China.
Analysts are looking for 2013 revenue of $22.82 billion.
While Cymbalta is not expected to start facing generic competition until the end of the year, the company cautioned that sales declines could begin sooner if wholesalers start to reduce inventory supplies prior to the patent expiration.
As a result, it said, the fourth quarter could look significantly different than the first three.
Lilly has already been battered by generic competition for its once top-selling schizophrenia drug, Zyprexa, and will face generic competition for its $1 billion-a-year Evista osteoporosis drug in early 2014.
But help is on the way. Lilly said it now has 13 drugs in late-stage testing, the most at any one time in its history. It could seek approvals this year for drugs for Type 1 and Type 2 diabetes, gastric cancer and for a type of lymphoma.
Chief Financial Officer Derica Rice told analysts on a conference call that the company was firmly focused on replenishing the developmental pipeline. "This is our future and it's our first priority."
The company also vowed to maintain its dividend payout and complete its share repurchase plan.
"Lilly has financially done a really good job. Obviously, you need the pipeline to come through," said Barclay's Butler, adding that positive late-stage data on ramucirumab in breast cancer could signal an important new product for Lilly. The drug is also in late-stage testing for the smaller gastric cancer market.
Other key events for Lilly in 2013 include the start of a new Phase III trial of solanezumab in patients with mild Alzheimer's disease after an earlier study failed but showed some signs of hope for the memory-robbing condition, and an August trial challenging a method of use patent on the $3 billion-a-year lung cancer drug Alimta.
Should Lilly prevail in court, the company could have patent protection on the medicine into 2022 even though the basic patent lapses in 2016.
Asked if the company would consider settling the case before it comes to trial, Phil Johnson, Lilly's vice president for investor relations, said: "Nothing is off the table, but we have not historically entered into those kinds of agreements."
Eli Lilly shares were up 3.8 percent at $51.60 on Friday afternoon on the New York Stock Exchange.

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