Apple and Samsung capture 99% of handset industry profits: Canaccord - Canada.com

They are the 99%. Together Apple Inc. and Samsung Electronics Co. captured almost all of industry profits attributable to handset sales in the first quarter of the year, according to Canaccord Genuity.

In a monthly look at the wireless industry, analyst Michael Walkley noted that while both Samsung and Apple posted solid market share numbers during the quarter (for example 29% and 23% of smartphone sales, respectively), they blew away their competition on operating profits.

"With strong iPhone market share during Q1/12 combined with Samsung's share consolidation within the Android ecosystem including increased sales of higher margin products such as the Galaxy Note, we estimate Apple and Samsung captured a remarkable 99% of Q1/12 handset industry profits," Mr. Walkley said in a note to clients Tuesday.

How is that actually possible?

Using company records and Canaccord's own estimates, Mr. Walkley broke down total industry profits for the quarter of US$14.4-billion by leading original equipment manufacturers.

With Apple's operating income for the quarter at US$10.4-billion, its share of industry profits comes in at an estimated 73%, despite having just 9.0% of global sales of handsets in general.

At US$3.7-billion in operating income, Samsung's value share is 26%. (It had an estimated 25% of global handset unit sales during the quarter.)

Nokia, Motorola Mobility, Sony Ericsson all posted or are expected to post losses and capture -1% of industry profits.

At US$480-million in operating income, Research in Motion Ltd.'s share is 3%.

LG came in at 0% and HTC was at 1%, according to Mr. Walkley's calculations.

So where from here?

"With RIM, Nokia, HTC and Sony all in the midst of product transitions and Motorola Mobility merging with Google, we believe Apple and Samsung will maintain their dominant position throughout 2012," Mr. Walkley said.