It has been an eventful last few days for Samsung. They lost a landmark patent lawsuit against Apple, receiving a penalty of $1 billion in the process. While the final verdict on that case is still some time off as they challenge the original ruling, Samsung has been enjoying a very profitable year. In fact, this year has been Samsung’s best in terms of quarterly profits. They have had four successive record quarters, something almost unimaginable in the economic scenario today.
Strong Sales Offset Reduced Orders
Samsung’s revenue depends hugely upon their new series of high-end television sets, smartphones and tablets. The sales of all these have been high despite facing stiff competition from Apple and other manufacturers. To put the sales into perspective, Samsung is now selling lesser chips and screens to Apple. Apple, besides being Samsung’s arch nemesis, is also its biggest client. Their ‘falling-out’ over the lawsuit would result in the orders from Apple being reduced.
A Highly Successful Year
The Korean company has reported a quarterly profit for 8.1 South Korean won. This figure is almost double that of the same quarter last year, going to show how good a year this has been for Samsung. In dollars, that amount equals over $7 billion. However, some industry experts are expecting that much of the impact from this profitable quarter will be diluted if they fail to have their penalty of a billion dollars overturned.
Purple Patch Fading
There is no doubt that Samsung has had an incredible year in terms of profitability, but it seems like they have finally run out of steam to propel this performance into the next year. With every passing quarter, the industry expected them to slow down but the fact they have managed to sustain it for four straight quarter shows the hard work put in. The folks down at Samsung can expect a sizable performance bonus for this year’s incredible purple patch.
Well, as with all purple patches, this one has to end and it now looks more likely than ever. Even the purplest of patches cannot continue forever. The Apple lawsuit is seen as a major turning point, not only for this year but for the near future. Only if Samsung can have the verdict overturned will they be able to breathe a sigh of relief. In addition, the company spent almost $3 billion on marketing and promotion in the last quarter alone, most of it during the London Olympics.
Adding this to the $1 billion they would have to pay Apple if they lose the appeal takes some sheen off their record fourth quarter. The demand for their products isn’t falling so they can expect the strong sales to carry on into the near future but with orders falling for its components, their revenue is going to take a hit.
Even the most optimistic of Samsung directors wouldn’t have expected their purple patch to go on forever. It remains to be seen whether they are prepared for its end.
[Image via samsung]