Apple Maintains Mobile Phone Profit Lead in March Quarter

Source: Thinkstock

Source: Thinkstock

When it comes to profits, the worldwide smartphone market definitely remains a two-horse race. Apple (NASDAQ:AAPL) and Samsung (SSNLF.PK) combined accounted for 106 percent of the handset industry’s profits during the March quarter, according to the latest data from Canaccord Genuity, reports Apple Insider. Based on Canaccord Genuity’s estimates, Apple took home most of the handset profits with a 65 percent share, while rival Samsung accounted for a 41 percent share.

Apple’s 65 percent share is an increase from the year-ago quarter when the Cupertino-based company accounted for 57 percent of the industry’s total profits. Meanwhile, Samsung’s share of the profits declined compared to the same period last year when it had a 43 percent share.

It should be noted that Apple and Samsung were able to obtain more than a 100 percent share of the profits due to operating losses from other vendors. Nokia (NYSE:NOK), the Finnish smartphone maker that recently completed the sale of its devices and services business to Microsoft (NASDAQ:MSFT), was the biggest money loser in the first-quarter of calendar 2014. Nokia had a -3 percent impact on the total industry’s profits, slightly worse than the -2 percent value share it achieved in the previous quarter. Struggling Canadian smartphone maker BlackBerry (NASDAQ:BBRY) also had a negative impact on the industry’s profits with a -1 percent value share. Google (NASDAQ:GOOG) (NASDAQ:GOOGL)-owned subsidiary Motorola Mobility, which is currently in the process of being acquired by Chinese tech company Lenovo, was similarly unprofitable with a -1 percent value share.

On the other hand, HTC, LG, and Sony (NYSE:SNE) had essentially no effect on the handset industry’s profits after each company ended the March quarter with a zero percent share of the profits. Although Chinese manufacturers such as Lenovo, Huawei, and Xiaomi are becoming increasingly big players in the handset industry, Canaccord Genuity analyst T. Michael Walkley noted that he didn’t include any Chinese companies in his analysis, due to a lack of financial information, reports Apple Insider. However, Walkley noted that Chinese vendors could one day present a bigger challenge to Apple and Samsung.

“Given the current competitive dynamics, we believe Apple and Samsung will maintain dominant value share during 2014,” wrote Walkley, according to Apple Insider. “With BlackBerry struggling and Microsoft purchasing dominant Windows Phone OEM Nokia, we believe Chinese OEMs with strong Android portfolios will likely emerge as stronger long-term competitors to Apple and Samsung.”

Although Samsung shipped almost twice as many smartphones as Apple did last quarter according to IDC data, the Cupertino-based company was still able to take home the lion’s share of the profits thanks to its high operating margins. According to Canaccord Genuity, Apple had an estimated 37 percent mobile device operating margin in the March quarter, compared to Samsung’s margin of 22 percent.

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