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Samsung, Motorola, And Android

Posted on Friday, May 28th 2010

According to IDC, the overall mobile phone market grew 21.7% in the first quarter while the smartphone market grew 56.7% with shipment of 54.7 million smartphones. Smartphones accounted for 18.8% of all mobile phones shipped in the first quarter. We have recently covered Apple, RIM, Palm (recently acquired by HP), and Nokia. Let’s now look at the performance of Motorola and Samsung.

In the mobile phone market, Motorola’s share continued to decline and for the first time since 2004, it lost its place in the top 5 list while RIM gained entry into it. However, Motorola stormed back into the smartphone race with its Android smartphones. After a long gap, it made it to the top 5 smartphone vendors last quarter and slipped one place this quarter to No.5 with 4.2% share of the smartphone market.

Samsung, on the other hand, has maintained its No.2 position for the twelfth straight quarter. It captured 21.8% share in the quarter with shipment of 45.9 million units versus 18.9% share last year. It expanded its distribution channels in the emerging markets and launched some new Android phones. It plans to launch more Android and Bada-powered devices and more touch-enabled devices for the mass-market.

Samsung Electronics (005930.KS) recently reported first quarter revenue of 34.64 trillion Korean won ($31.3 billion), up 21%. Net income was 3.99 trillion won ($3.15 billion) and operating profit increased 643% to 4.41 trillion won. Samsung ended the quarter with 20.64 trillion Korean won ($16.3 billion) in cash. Q4 coverage is available here.

Its semiconductor business grew 57% to 6.2 trillion won with increasing demand for DRAM and NAND amid steady PC shipment growth and strong demand for mobile products including tablet PCs. Its LCD business grew 40% while the Digital Media business grew 18%. Its Telecommunication business including mobile handsets and telecommunication networks grew 5% to 9.18 trillion won.

Motorola (NYSE: MOT) recently reported strong first quarter results with an unexpected profit. Revenue was down 6% to $5 billion and net income was $69 million or $0.03 per share versus a loss of $291 million or $0.13 per share last year. The company ended the quarter with cash position of $8 .5 billion in cash. Q4 coverage is available here.

During the quarter, the company shipped 8.5 million handsets including 2.3 million smartphones helped by strong sales of the Droid and Devour handsets at Verizon and the Backflip handset at AT&T. Compare this to the 46.4 million handsets shipped four years ago in the first quarter. Mobile Devices segment sales were $1.6 billion, down 9%, while GAAP operating loss narrowed to $192 million from $545 million last year. The company introduced six new Android smartphones in the quarter, taking its smartphone tally to eight.

Home segment revenue was $838 million, down 18%, Enterprise Mobility revenue was $1.7 billion, up 6%, and Network revenue was $896 million, down 7%.

For the second quarter, Motorola expects earnings of $0.07 to $0.09 per share. Its stock is currently trading around $7 with market cap of about $16 billion. Its 52-week high was $9.23 on September 15.

Chart forMotorola Inc. (MOT)

Both Samsung and Motorola have launched Android-based smartphones, which are driving their smartphone sales. Samsung recently launched Wave, its first smartphone based on its proprietary Bada OS. Even though Motorola’s overall mobile phone market share has declined, it is back in the more profitable smartphone race, which should help it turn around. A recent MarketWatch report says that about six companies were interested in Palm and that both Samsung and Motorola could have been among them. Even Cisco, which is rumored to be working on its own tablet device, was speculated to be among the prospective buyers. With HP buying Palm, Cisco is also working on its convergence device strategy – it recently agreed to buy Moto Development Group.

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