Q2 2012: China smartphone market: Samsung leads, followed by ZTE, Lenovo, Huawei and Apple.

WorldWide Tech & Science. Francisco De Jesùs.

Q2 2012: China smartphone market: Samsung leads, followed by ZTE, Lenovo, Huawei and Apple.

The number of Chinese-made smartphones being shipped to local retailers saw a "phenomenal" increase in the second quarter boosted by strong demand and performance by domestic makers, an industry report has shown.

More than 42 million smartphones were shipped to Chinese retailers last quarter, a jump of 32 percent quarter-on-quarter. The increase rate also represents the second consecutive quarter of record breaking in volumes, said a report released by IT research company Canalys.

"The growth in China was heavily driven by domestic vendors, while international vendors struggled to keep pace," said the report.

China accounted for 27 percent of the 158 million smartphones shipped around the world, compared with the United States that shipped 16 percent.

South Korean mobile phone maker Samsung Electronics Co maintained its overall leadership in the Chinese smartphone market with a 17 percent market share, followed by Chinese makers such as ZTE, Lenovo and Huawei.

The number of Apple Inc smartphones in China fell to fifth place in China, down 37 percent compared with the first quarter.

"Local tier-one vendors have worked hard in recent quarters to greatly improve their brand resonance among consumers and to expand and enhance their relationships and influence within operators," said Nicole Peng, research director for Canalys China.

Q2 2012: LinkeIn had strong revenues. Stock jumps.

WorldWide Tech & Science. Francisco De Jesùs.

Q2 2012: LinkeIn had strong revenues. Stock jumps.

LinkedIn had strong revenue in the second quarter thanks to growth from ads and the fees it charges for deeper access to its vast trove of professional profiles.

Although net income fell because the company is spending more to grow, revenue increased faster than expected. The company also raised its forecast for the full year.

LinkedIn's stock increased after the results came out Thursday, a reprieve after tepid news from other newly public Internet companies - namely Facebook and Zynga. LinkedIn, which went public more than a year ago, is among the best-performing of the newly traded companies, with its stock trading at more than twice the level of its IPO price at a time when Facebook is nearing half.

The results indicate that LinkedIn is playing a greater role in the employment market as millions more people look to find jobs and network online if they do have jobs. LinkedIn said it had 174 million members at the end of June, up 50 percent from a year earlier. Most of the growth in the second quarter came from overseas as LinkedIn continued to expand outside of the U.S.

LinkedIn gets more than two-thirds of its revenue from fees it charges companies, recruiting services and anyone who wants broader access to the profiles and other data on its site. The rest comes from advertising.

LinkedIn, like Facebook, is at the beginning stages of making money from its mobile applications. CEO Jeff Weiner said in a conference call with analysts that LinkedIn launched its first mobile ad test at the end of June, when large corporations such as Shell started running advertisements on LinkedIn's iPad application. He called the early signs "positive."

LinkedIn Corp. earned $2.8 million, or 3 cents per share, in the second quarter. That's down 38 percent from $4.5 million, or 4 cents per share, a year earlier.

Adjusted earnings, which exclude stock compensation expenses and other items, were $18.1 million, or 16 cents per share, matching analysts' expectations. Last year, LinkedIn had adjusted earnings of $10.8 million, or 10 cents per share.

Revenue increased 89 percent to $228 million, from $121 million. Analysts had expected lower revenue of $216 million, according to FactSet.

LinkedIn, which is based in Mountain View, Calif., continued to invest in its business during the quarter, hiring 414 employees to bring the total to more than 2,800 worldwide. 

Overall, marketing, development and other expenses increased 93 percent to $215 million, from $111 million a year earlier.

For the current quarter, LinkedIn said it expects revenue of $235 million to $240 million. Analysts were expecting $236 million.

The company raised its full-year guidance. It now expects revenue of $915 million to $925 million, up from the prior range of $880 million to $900 million. Analysts had expected $907 million.

LinkedIn's stock climbed $3.84, or 4.1 percent, to $97.35 in after-hours trading. The stock had closed down $2.13, or 2.2 percent, to $93.51.

By contrast, Facebook's stock fell below $20 on Thursday for the first time since going public in mid-May, when the stock priced at $38. It closed at $20.04. Unlike LinkedIn, Facebook disappointed investors with its first earnings report as a public company last week, and the stock has been falling since.

Zynga, the online game maker, has had its stock battered by investors in recent months. Its shares are down 73 percent from their $10 IPO price amid worries about its ability to keep growing revenue from its games, which are played mostly on Facebook.

Meanwhile, Yelp Inc., the online reviews site, has been another bright spot. Its revenue grew 67 percent in the latest quarter, to $32.7 million, surpassing Wall Street's expectations. Its stock closed nearly 17 percent higher on Thursday, at $22. That's up nearly 47 percent from its March IPO price of $15.

AP.

USA: Q2 2012: Androids still leading the smartphone market but declines to 56,3%, Apple regains 10% up.

WorldWide Tech & Science. Francisco De Jesùs.

USA: Q2 2012: Androids still leading the smartphone market but declines to 56,3%, Apple regains 10% up.

United States Smartphone OS Shipments and Market Share in Q2 2012

United States Smartphone Operating System Shipments (Millions of Units)	Q2 '11	Q2 '12
Android	15.3	13.4
Apple iOS	5.9	7.9
Blackberry OS	2.7	1.6
Others	1.4	1.0
Total	25.2	23.8
United States Smartphone Operating System Market Share (% of Total)	Q2 '11	Q2 '12
Android	60.6%	56.3%
Apple iOS	23.2%	33.2%
Blackberry OS	10.5%	6.5%
Others	5.7%	4.0%
Total	100.0%	100.0%
Total Growth Year-over-Year %	70.1%	-5.4%

According to the latest research published by Strategy Analytics’ Wireless Smartphone Strategies (WSS) service, smartphone shipments fell 5 percent annually to reach 24 million units in the United States during the second quarter of 2012. The Android operating system lost ground to Apple iOS as Android’s market share fell four points on an annual basis to 56 percent.

This was one of the slowest growth rates ever experienced by the important US smartphone market. A volatile economy, maturing penetration of smartphones among contract mobile subscribers, and major operators tightening their upgrade policies to enhance profits were among the main causes of the slowdown.

Android remains the number one platform by volume in the United States, but its market share is peaking as Apple iOS gains ground. Apple’s US market share has risen by ten points from 23 percent in Q2 2011 to 33 percent in Q2 2012. Apple is rumoured to be launching a new iPhone in the coming weeks, and that event, if it takes place, is going to heap even more pressure on Android in its home market.

Blackberry’s smartphone market share in the United States has dropped from 11 percent to 7 percent over the past year, reaching its lowest level in recent history. Consumers, businesses and operators continue to be frustrated by Blackberry’s limited toushcreen smartphone portfolio and repeated delays to its new BB10 operating system.

Q2 2012: Samsung Electronics Announces Earnings Results.

WorldWide Tech & Science. Francisco De Jesùs.

Samsung Electronics Announces Second Quarter 2012 Earnings Results.

- Posts record operating profit of 6.72 trillion won (5,88672 billion U.S. dollars)on consolidated revenues of 47.6 trillion won (41.6976 billion U.S. dollars)

SEOUL--(Korea Newswire) July 27, 2012 -- Samsung Electronics Co., Ltd. today announced revenues of 47.60 trillion Korean won (41.6976 billion U.S. dollars) on a consolidated basis for the second quarter ended June 30, 2012, a 21-percent increase year-on-year.

For the quarter, the company's consolidated operating profit reached a record 6.72 trillion won, (5,88672 billion U.S. dollars)representing a 79-percent increase year-on-year. Consolidated net profit for the April-June period was 5.19 trillion won.( $3.65 billion )

In its earnings guidance disclosed on July 6, Samsung estimated second quarter consolidated revenues would reach approximately 47 trillion won with consolidated operating profit of approximately 6.7 trillion won.

Samsung posted solid sales and maintained its profit streak in the second quarter across all business segments, excluding semiconductors, amid lingering global business uncertainties. Digital Media & Communications – comprising the Consumer Electronics and IT & Mobile Communications business sectors – accounted for 36.57 trillion won (32,03532 billion U.S. dollars) in sales, up 37 percent year-on-year.

For Device Solutions, the results were mixed. While operating profit for the Display Panel segment registered an on-year increase, the Semiconductor Business saw profits drop by 38 percent compared with the same period last year, despite outperforming the previous quarter.

By business unit, the Mobile Communications Business was one of the leading growth drivers in the June quarter with 20.52 trillion won (17,97552 billion U.S. dollars) in revenue. With the successful launch of this year's flagship GALAXY S III smartphone and robust GALAXY Note sales, the handset unit saw earnings jump by 75 percent from a year earlier.

The Visual Display Business also contributed to earnings gains with its diverse portfolio of TV models for both developed and emerging markets with 8.58 trillion won (7,51608 billion U.S. dollars) in revenue for the quarter.

"Despite a difficult business environment, we achieved stable profits in the second quarter through our differentiated products and competitive technology," said Robert Yi, Senior Vice President and Head of Investor Relations. "As we move into the second half, continued fiscal instability in Europe and its effect on the global economy will result in the possibility of a slower-than-expected recovery and intensified market competition."

Mr. Yi added that despite the economic uncertainties, "Samsung will enhance the competitiveness of our main businesses and reinforce our value-added, differentiated products as a means to improve earnings."

Overall, the third quarter is expected to be marginally positive as demand for consumer electronics goods, including smartphones and tablets, remains strong and a stream of new products hit the market. Supply for display panels is also expected to increase, as TV makers prepare for the year-end holiday season.

Capex 14 Trillion Won in First Half

Capital expenditure in the first six months was 14 trillion won( 12.26400 billion U.S. dollars), with 9.7 trillion won (8,4972 billion U.S. dollars) invested in the Semiconductor Business and 2.6 trillion won (2,2776 billion U.S. dollars)in the Display Panel segment. The total capex for the first half accounted for 56 percent of the annual capex budget of 25 trillion won (21.9 billion U.S. dollars) planned for 2012. Capex for the first quarter was 7.8 trillion won.(6,8328 billion U.S. dollars)

Mobile AP Chips Sustain Growth

Samsung's Semiconductor segment – including the Memory and System LSI businesses – posted an operating profit of 1.11 trillion won on revenue of 8.6 trillion won for the quarter, which equates to a 6-percent year-on-year decline in sales.

Weak global demand for PC DRAM chips still weighed on Samsung's push for a recovery, although it responded to increased orders for server and mobile DRAM and hastened migration to the 30-nanometer and below process.

The NAND market picked up on higher OEM-related demand, improving quarter-on-quarter sales, particularly in solution products such as Solid State Drives (SSDs) for notebook PCs and Embedded Multimedia Cards (eMMC), but a steepening price decline hampered stable growth.

The System LSI Business, which creates application processors (AP) and image sensors for smartphones, is forecasted to maintain profitability in the third quarter as demand for faster and higher-capacity chips used in mobile devices increases.

Samsung will also look to gain a leading edge in the mobile AP business, following the recent announcement of our acquisition of CSR's mobile business and NanoRadio, which we expect to reinforce our already differentiated mobile AP technology.

In the third quarter, we anticipate a weaker-than-expected recovery in demand for PC DRAM due to lackluster back-to-school orders and intensifying competition.

In contrast, we expect market conditions for NAND to improve in the lead-up to the National Day and Black Friday holidays in China and the U.S., respectively. Samsung will continue to concentrate on value-added products such as server and mobile DRAM.

Display Panel Continues Improvement

The Display Panel segment recorded an operating profit of 750 billion won on revenue of 8.25 trillion won. This amounted to a 470 billion won increase in profit from the previous quarter and a 16-percent increase in sales compared to the same period last year.

Despite weaker than expected panel demand due to the economic slowdown in Europe and low seasonality, Samsung's total TV panel shipments increased in the low 10-percent range on-year due to strong sales of high, value-added products such as panels for 3D TVs and LED TVs.

Looking ahead, demand for TV panels is expected to grow in the next quarter as TV makers prepare for the end-of-year high-demand season and the Chinese National Day holidays. The effect of an energy saving subsidy in China is also expected to stimulate demand for LED TV products.

For the IT panel sector, the continuation of weak demand for panels used in notebook PCs and monitors was offset by strong demand for tablet PC panels. Launches of new smartphone products also contributed to continued profitability in OLED panels.

In the third quarter, economic uncertainty in developed markets and the sluggish market demand for notebook PCs and monitors is expected to dampen overall demand. The expansion and diversification of the tablet PC market, however, is forecast to fuel an increase in demand for tablet PC panels and Samsung will aim to expand sales of LCD and OLED panels for smartphones.

Sales of Smart Devices Lead Gains

The IT & Mobile Communications division, comprising Mobile Communications, Telecommunication Systems, IT Solutions and Digital Imaging, registered quarterly operating profits of 4.19 trillion won for the second quarter. Revenue reached 24.04 trillion won, and the mobile unit accounted for 20.52 trillion won, a 75-percent increase year-on-year.

The highly anticipated launch of GALAXY S III and upbeat sales of GALAXY Note, along with a more competitive average selling price (ASP) than the previous quarter, have cushioned an on-quarter operating loss brought on by the seasonably weak earnings of businesses in IT Solutions and Telecommunication Systems.

Handset shipments gained quarter-on-quarter and year-on-year, driven mainly by global orders for premium smartphones.

A sales decline in Long Term Evolution (LTE) wireless broadband technology equipment and slow demand for PCs and printers in the quarter will turn around in the July-September quarter with the expansion of LTE networks in developed countries and modest revenue growth in IT products.

The smartphone market, in particular, will continue to be profitable as consumers are given a wider choice of new products at a wider range of prices while orders from emerging markets increase.

In the third quarter, Samsung expects to further strengthen its leadership in the high-end smartphone market with the sales of GALAXY S III and also in the LTE equipment business with new devices.

TV Demand Boosts Profitability

The Consumer Electronics Division – encompassing the Visual Display and Digital Appliances businesses – posted revenue of 12.15 trillion won for the second quarter, a 7-percent increase year-on-year. The operating profit of 760 billion won represented an increase of 66 percent compared with the same period last year.

Although demand for TVs remained flat year-on-year, Samsung posted improvements in both shipments and profitability. Increased sales in developed markets for the company's premium TVs, such as the flagship ES7000 and ES8000 models, and expansion of region-specific LED TV models in emerging markets spurred a significant lift in earnings compared with the same quarter of last year.

This increase in demand saw Samsung increase its portion of LED TV sales from the mid 60-percent range to a mid 80-percent share, quarter-on-quarter.

Heading into the third quarter, although growth in developed markets may stall, Samsung aims to expand its presence in emerging markets with region-specific products and entry-level LED TVs. The company will also look to continue its leadership in Smart TVs in developed markets with continued cooperation with media and content providers.

As for Digital Appliances, sales of air conditioners rose on the back of strong seasonal demand and favorable market conditions in emerging markets. Moving into the third quarter, Samsung will focus on expanding sales of premium products and stabilizing overseas operations in the face of a possible slowdown in emerging markets and weak consumer sentiment in developed markets.

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Q2 2012: Samsung sold 50,5 million smartphones, Apple 20,6 million, on worldwide smartphone market share.

WorldWide Tech & Science. Francisco De Jesùs.

Q2 2012: Samsung sold 50,5 million smartphones, Apple 20,6 million, on worldwide smartphone market share.

According to a new, published report from  Wireless Smartphone Strategies (WSS) service, global smartphone shipments grew 32 percent annually to reach 146 million units in the second quarter of 2012. This was the smartphone industry’s slowest growth rate for almost three years. Samsung and Apple together captured over half the global market.

Global smartphone shipments grew 32 percent annually to reach 146.1 million units in Q2 2012. This was the smartphone industry’s slowest growth rate since the third quarter of 2009. A volatile global economy, maturing penetration of smartphones among contract mobile subscribers, and some Apple fans holding off purchases in anticipation of a new iPhone 5 model later this year were among the main causes of the slowdown.

Samsung shipped 50.5 million smartphones worldwide and captured a record 35 percent marketshare in the second quarter of 2012. This was the largest number of units ever shipped by a smartphone vendor in a single quarter. Samsung has been able to deliver hit models in most major price segments, from the high-end Galaxy Note phablet to the mass-market Galaxy Y. Apple grew a modest 28 percent annually and shipped 26.0 million smartphones worldwide for 18 percent marketshare, broadly flat compared with 18 percent recorded a year earlier. We believe Apple’s lackluster performance was driven by some Apple fans and operators holding off iPhone purchases in anticipation of a rumored new iPhone 5 model around September or October this year.

Samsung and Apple combined now account for over half of all smartphones shipped worldwide, up from around one-third a year ago. Volumes have polarized around those two brands. The growth of Samsung and Apple has come partly at the expense of Nokia, whose global smartphone marketshare has halved from 15 percent to 7 percent over the past year. This is Nokia’s lowest marketshare level in the smartphone category for a decade. Nokia is seeing reasonable growth in its new Microsoft Lumia portfolio, but it is not yet offsetting the sharp decline in its aging Symbian platform.

Exhibit 1: Global Smartphone Vendor Shipments and Market Share in Q2 2012  [1]

Global Smartphone Vendor Shipments (Millions of Units)	Q2 '11	Q2 '12
Samsung	20.2	50.5
Apple	20.3	26.0
Nokia	16.7	10.2
Others	53.3	59.4
Total	110.5	146.1
Global Smartphone Vendor Marketshare  %	Q2 '11	Q2 '12
Samsung	18.3%	34.6%
Apple	18.4%	17.8%
Nokia	15.1%	7.0%
Others	48.2%	40.7%
Total	100.0%	100.0%
Total Growth Year-over-Year %	77.1%	32.2%

1 Numbers are rounded.

Contact Information:

The author of this report and analysis, Neil Mawston, can be reached at NMawston@strategyanalytics.com / +44 1908 423 628.