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Samsung Reports 42 Percent Jump in Profit

In an earnings report, Samsung said its net profit from January through March had soared 42 percent to 7.2 trillion won, or $6.5 billion, from 5 trillion won a year earlier.

Sales rose 17 percent to 52.9 trillion won. Operating profit was up 54 percent to 8.8 trillion won. Profit from the division that makes smartphones, tablets, personal computers and cameras accounted for nearly three-quarters of the company’s entire profit.

Samsung is the world’s largest maker of computer memory chips, televisions, mobile handsets and LCD panels. It does not provide smartphone sales figures, but it has increasingly relied on smartphones as its main profit generator — a strategy that has brought the company into patent and marketing clashes with Apple.

Samsung began sales of its latest Galaxy S4 smartphone in South Korea on Friday. It planned to introduce it in the United States on Saturday.

Samsung’s rivalry with Apple on the Apple’s home turf intensified as Apple reported its first profit decline in more than a decade. Apple also indicated it planned no major product releases until the autumn.

Samsung has challenged Apple’s once dominant place in the world’s smartphone market by flooding it with a range of models with a variety of screen sizes and prices and updating its versions faster than Apple ever has.

Samsung captured a third of the global smartphone market in the first quarter, according to data released by Strategy Analytics. Shipments of Samsung smartphones surged 56 percent to 69.4 million units in the quarter, it said. Apple iPhone shipments rose 6.6 percent to 37.4 million units.

“Although market uncertainties from the European crisis and the slow global economic recovery are still lingering, we expect to increase” spending on research and development “for strengthening our competitiveness ahead of planned new product launches,” Robert Yi, Samsung’s head of investor relations, said in a statement.

Amazon Reports Weak Results, Shares Fall Over 5 Percent

Amazon shares slipped slightly to $220.75 in after-hours trading after the results.

The company said its third-quarter net loss was $274 million, or 60 cents a share, versus net income of $63 million, or 14 cents a share, in the third quarter of 2011. Part of the loss related to an impairment charge from Amazon's investment in daily deal company LivingSocial.

Third-quarter revenue was $13.81 billion, up 27 percent from a year earlier, Amazon also said.

Amazon was expected to lose 8 cents a share in the third quarter on revenue of $13.9 billion, according to Thomson Reuters I/B/E/S.

The last time Amazon reported a quarterly net loss was in the third quarter of 2003, according to Thomson Reuters data.

For the crucial fourth-quarter holiday shopping period, Amazon forecast revenue that missed analysts' expectations. The company also gave a wide forecast for operating income in the period - and the mid-point of the range was lower than some analysts' estimates.

"There's increased competition from mass merchants and big box retailers embedded in that guidance," said RJ Hottovy, an equity analyst at Morningstar. "There's a lot of competition this holiday, and it's not clear how this will play out, even for smart operators like Amazon."

Amazon is facing more competition this holiday season from big retailers such as Target Corp and Best Buy Co Inc, which are planning to match some of the company's prices online.

Wal-Mart Stores Inc, the world's largest retailer, is also testing same-day delivery in some cities this holiday, while Target is selling more exclusive products that cannot be bought at lower prices online.

Amazon is also spending heavily on new distribution warehouses and technology to support its cloud-computing businesses, Amazon Web Services. It is also investing hundreds of millions of dollars a year on digital content to sell through its Kindle tablets and e-readers.

Amazon Chief Financial Officer Tom Szkutak said the company will continue investing heavily in technology, infrastructure and digital content.

The company spent $1.51 billion on shipping and warehouses in the third quarter, up from $1.12 billion a year earlier. Technology and content spending reached $1.19 billion, up from $769 million in the same period last year.

The Kindle gadgets are being sold at cost, pressuring earnings in the short term. Amazon hopes to make money when customers use them to buy more physical and digital products from the company.

Amazon launched new Kindle Fire tablets in September and CFO Szkutak said demand has been "fantastic."

Chief Executive Jeff Bezos said in a statement that the new $199 Kindle Fire HD, the new Kindle Paperwhite e-reader and the entry-level $69 Kindle e-reader are the top three best-selling products on Amazon, based on unit sales.

Szkutak said Kindle Fire tablet users are purchasing a lot more digital content through the devices, as well as watching free video content.

The introduction of new tablets and e-readers should be good for digital content sales going forward, he added.

Europe's sovereign debt crisis and recession is reducing consumer demand, sparking concern that even fast-growing Internet companies may be affected.

EBay Chief Financial Officer Bob Swan said last week that the company expected an "OK" holiday season, partly because of macro pressure in Europe.

Amazon said on Thursday that revenue from North America was $7.88 billion, up 33 percent from a year earlier. International sales, including Europe, totaled $5.92 billion, up 20 percent from the same period in 2011.

(Reporting By Alistair Barr; Editing by M.D. Golan)

Facebook’s Revenue Rises 32 Percent to $1.26 Billion

Facebook said on Tuesday that it now gets 14 percent of its advertising revenue from mobile ads, helping to reassure investors that the social network is beginning to figure out how to earn money off smartphone and tablet users.

Mobile ad revenues totaled roughly $150 million, up from an estimated $40 million to $50 million in the second quarter and almost nothing in the first.

"This certainly dispels the most bearish view, that Facebook couldn't monetize people on phones or tablets," said Colin Sebastian, an analyst with Robert Baird & Co.

"In about a six-month period they've actually started to generate decent revenues form their mobile applications," Sebastian added, though he said Facebook still needs to show that its mobile ads can command the same rates as its traditional ads and that they can deliver results for marketers.

Mobile advertising has been among the key investor concerns hanging over Facebook, helping slash more than $40 billion off its market value since its May IPO. As its users increasingly access the social network with their smartphones, Facebook has struggled to transition its business to mobile devices.

The mobile ads helped reignite Facebook's overall advertising business during the third quarter, following several consecutive quarters of slowing revenue growth that raised questions about Facebook's long-term prospects.

Advertising revenue increased 36 percent to $1.09 billion, up from 28 percent growth in the second quarter. But revenue from its payments and other businesses increased just 13 percent to $176 million.

Mark Zuckerberg, the 28-year-old chief executive who created Facebook in his Harvard dorm room, said mobile was the "most misunderstood aspect" of the company and took issue with the "myth" that Facebook could not earn money on mobile.

"Over the long run we're going to see more monetization per time spent on mobile than on desktop," Zuckerberg said on a conference call with analysts on Tuesday.

The company's shares leapt nearly 13 percent to $21.97 in after-hours trading on Tuesday.

Facebook said it had crossed the 1 billion threshold for monthly active users by September 30, of which 604 million were mobile users, a gain of 61 percent from a year earlier.

The shift to mobile has challenged many of the Web industry's top companies. Google Inc is the No.1 provider of smartphone software with its Android operating system. But the company missed Wall Street's revenue targets in the third quarter, with some analysts blaming the shortfall on its increasing reliance on lower-priced mobile ads.

Social game maker Zynga Inc, which announced layoffs of 5 percent of its staff on Tuesday, has suffered as it struggles to translate its hit games to mobile devices and as the use of its games on Facebook's service declines.

NOT PLEASED WITH GAMING

Zynga's woes were visible in Facebook's results, with Facebook's payments revenue from the maker of Farmville down 20 percent year on year.

Zuckerberg said he was not pleased with revenue from gaming, but said that beyond Zynga - which accounts for 7 percent of Facebook's total revenue - the situation was brighter.

"The interesting thing is that the rest of the games ecosystem has actually been growing. Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the past year, since payments has been adopted," he said.

Zuckerberg also said Instagram, the photo-sharing app that Facebook acquired for roughly $750 million this year, now has 100 million users, up from 27 million when Facebook bought the company.

Facebook posted a net loss of $59 million or 2 cents a share in the three months ended September 30 after booking a big provision for income taxes. Excluding share-based compensation and income tax adjustments, it earned 12 cents a share, a penny higher than the average analyst expectation.

Facebook Finance Chief David Ebersman said the company would continue to invest aggressively during the fourth quarter, though the company did not provide a specific financial outlook, in keeping with its previous practice.

Ebersman said that the total number of ads that Facebook delivered in the third quarter increased 27 percent year-on-year and that the average price per ad increased 7 percent.

Facebook's third-quarter mobile revenue marked a big jump from the second quarter, when Facebook said that it was generating more than $1 million a day from a new class of ads that appear in users' newsfeeds. Facebook said that roughly half of that revenue was from mobile ads, suggesting that mobile advertising revenue totaled $45 million in the second quarter.

Stifel Nicolaus analyst Jordan Rohan said that Facebook's mobile ad revenue was impressive, but said that Facebook needs to proceed carefully so as not to damage the user experience by overloading its service with too many ads.

And he said that Facebook's desktop PC advertising business appeared to have shrunk by about $40 million from the second quarter. Rohan said he would rather see the desktop ad business remain stable as the mobile ad business grows.

Facebook's third-quarter revenue of $1.26 billion was a hair above the average analyst expectation of $1.23 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Alexei Oreskovic; Editing by Phil Berlowitz and Mark Bendeich)

Ericsson Earnings Decline 63 Percent in 2d Quarter

BERLIN — Ericsson said Wednesday that its profit fell by 63 percent in the second quarter, as telecommunications carriers trimmed spending on equipment in the United States, Russia and China.

Net income fell to 1.2 billion Swedish kronor, or $172 million, on a 1 percent increase in sales, to 55.3 billion kronor, Ericsson said.

Shares of the company, which is based in Stockholm, fell by 2.6 percent to 57.3 kronor in afternoon trading Wednesday.

Hans Vestberg, the chief executive of Ericsson, told analysts in Stockholm that economic slowdowns in Russia and China had weighed on profits, along with falling demand for older network gear in North America, where operators are activating new, upgraded networks.

The decline was also driven by mounting losses at ST-Ericsson, a venture with Swiss chip maker ST Microelectronics that makes mobile-phone modems and components. The loss at the Geneva-based venture nearly doubled to 1.3 billion kronor from 700 million a year earlier.

Investors are closely monitoring signs of a further global slowdown, which would show up in the results of Ericsson, the biggest maker of telecommunications equipment.

“They are signaling that China may be on the weak side going forward and we already knew that Russia was coming down,” said Hakan Wranne, an analyst at Swedbank in Stockholm. “But the biggest concern is the U.S. market, which will continue to be weak.”

Sales of network equipment in North America, a region that accounted for nearly one quarter of Ericsson’s global sales, fell by 22 percent in the quarter. The decline came as carriers such as Sprint and Verizon Wireless replaced their older gear, which runs on a 1980s technology called Code Division Multiple Access or CDMA, with new networks built on a Internet-based transmission technology called Long Term Evolution, or LTE.

Globally, sales of CDMA equipment fell by 50 percent amid the transition to LTE grids, Ericsson said.

Ericsson partially offset weakness in its main network equipment business by selling outsourcing and software to carriers. Sales of services and software rose 29 percent in the period to 27.6 billion kronor from 21.4 billion, generated half of Ericsson’s quarterly sales.

Despite its falling profits, Ericsson is still faring better than some competitors. Alcatel-Lucent, the French network equipment maker, and ZTE, a Chinese rival, both issued profit warnings this week following poor second-quarter results. The message from Ericsson was more positive, although the company as is its practice gave no profit or sales forecasts.

Mr. Vestberg told financial analysts said that long-term demand for new network equipment was expected to remain strong, driven by rising purchases of smartphones. Through 2017, the number of smartphone subscriptions worldwide is expected to more than quadruple, Mr. Vestberg said, to 3 billion from 700 million at the end of June.

That will stoke demand for new LTE networks and network equipment, he said.

“We continue to stay close to our customers to monitor the impacts of macroeconomic development and political uncertainty in certain regions on their investments,” Mr. Vestberg said. “In customer conversations, it is clear that the fundamental drivers for increased data traffic are unchanged.”

In an interview, Mr. Vestberg said consumer demand for LTE handsets had started slowly, with only 2 million being sold worldwide each month in that last quarter. That compares with 5 to 10 million GSM mobile phones sold each month in India alone. The United States and South Korea are the world’s most advanced LTE markets, he said.

But other countries will soon follow, as new, faster networks come on line and more LTE handsets are sold at more affordable prices.

“The current LTE handset sales are still very low in global terms, but this is a transitional period and we are soon going to see explosive growth,” Mr. Vestberg said.

Mr. Wranne, the Swedbank analyst, said that Ericsson was better positioned because of its market leadership to capitalize on that coming growth. “The top line for Ericsson is really doing O.K. at the moment given the profit warnings from its competitors,” Mr. Wranne said. “The expectations given the current global situation weren’t that high, either.”