Analyst: Apple had 57% of Q2 handset profits
8/1/2011 6:17 PM EDT
SAN FRANCISCO—Despite holding only 5.4 percent share of the global handset market, Apple Inc. was responsible for a whopping 57 percent of all cellular handset operating profits in the second quarter, up from 51 percent in the first quarter and 41 percent in 2010, according to T. Michael Walkley, an analyst at Canaccord Genuity.
Apple generated nearly $4.66 billion in operating income from handsets in the second quarter, compared to $1.49 billion for South Korea's Samsung Electronics Co. Ltd., the next highest total, according to Canaccord Genuity. Samsung's total was good for roughly 18 percent of the global handset profit total, according to the firm.
OEMs gaining smartphone market share continue to capture and even greater share of the handset industry's overall profits, Walkey wrote in a report circulated Monday (Aug. 1). Samsung and Taiwan's HTC Corp. gained share of industry profits in the second quarter due to their leading share of smartphones powered by the Android operating system, Walkley wrote.
Several other OEMs, including Motorola Mobility Inc., Sony Ericsson Mobile Communications AB and LG Electronics Inc. are currently transitioning their product portfolios to offer a great mix of Android phones, Walkley noted. These OEMs posted mixed feature phone sales but better than expected smartphone sales and improved profitability given the mix shift to smartphones in the second quarter, he said.
Citing channel checks and earnings reports, Walkley said strong sales of smartphones in the second quarter resulted in an improvement in average selling prices compared to the first quarter and compared to the second quarter of 2010. "Apple and Android smartphones continue to gain market share, as consumers and developers increasingly embrace these leading smartphone ecosystems," Walkley wrote.
Walkley said the impact on handset components resulting from complications associated with the March 11 earthquake and tsunami off the coast of Japan has mostly been resolved.
Based on second quarter results from handset OEMs, Canaccord Genuity analysts believe that global handset unit sales decreased to 374 million in the second quarter, down from 382 million in the first quarter, Walkley wrote. But smartphone sales increased 10 percent quarter-over-quarter to 110 million units, Walkley said.
Canaccord Genuity predicts that unit shipments will increase 4 percent sequentially in the third quarter, reaching 389 million units. "OEMs worked through most of the excess inventory built-up in Q1/11, and we anticipate sequential sales growth during Q3/11 with a seasonally strong Q4/11," Walkley wrote.
Walkley said checks indicated that Apple's iPad 2 continued to sell briskly in the second quarter, with consumers overwhelmingly selecting it over competing Android tablets. Canaccord Genuity projects that Apple will sell 37.8 million iPads in 2011, 58 percent of the estimated 65.3 million total tablets the firm expects to be sold this year.