Samsung Passes Apple in Revenues, Profits

Korea’s Samsung Electronics has surpassed rival Apple in both revenues and profits during the third quarter of 2013, according to their respective financial statements.

During the July – September 2013 quarter Samsung became the first Korean company to exceed 10 trillion won ($9.34 bil.) in quarterly operating profits. Its profits were 10.1 trillion won ($9.43 bil.) on sales of 59 trillion won ($55.1 bil.). Both figures were records for the company.

Samsung’s market-beating performance was built on surging sales of its moderately priced smartphones as well as strong demand and rising prices for its DRAM and processor chips. Sales were up 2.68% over the previous quarter, producing a stellar 5.98% jump in operating profits. The company’s operating margin also rose 0.6% to 17.2%, another record.

The Korean company has a ways to go before it can match rival Apple’s gross margin of 36.9% on smaller revenues of $35.3 bil. The bulk of those revenues ($18.15 bil.) came from sales of 31.24 million iPhones, followed by $6.37 bil. from 14.62 million iPads.

But Samsung’s profits were 35% more than Apple’s profits of $6.9 billion. That’s quite an achievement for a company whose market cap is just under $200 billion, less than half of Apple’s $438 billion despite the fact that during the second quarter of this year Samsung sold 71 million smartphones, over twice as many as Apple. That’s a huge jump over the 44 million it sold during the same quarter of 2012, suggesting that its sales are gaining momentum while the iPhone’s has been relatively flat.

Aside from its lower gross margins, Samsung’s market cap may be adversely affected by the fact that it is one of few international electronics giants that doesn’t offer American Depository Receipts through which US investors can buy its shares indirectly.