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Samsung Could Beat Out Apple for Operating Profits in the Coming Quarter

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Apple is once again the world's largest company by market capitalization, but Samsung's strong Galaxy S4 sales, and Apple's weaker iPhone sales, could allow Samsung to take in more profits than Apple.

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Maybe you haven't noticed, but Apple (NASDAQ:AAPL) is once again on top of the world. No, really. After briefly dropping below $400 per share last month, Apple's stock has jumped about 13% in the wake of its April 23 earnings announcement – and the news that day that it would return $100 billion to shareholders in the form of buybacks and dividend increases.

The runup has given Apple a market capitalization of just over $430 billion – once again the largest in the world. Apple and Exxon Mobil (NYSE:XOM) have been trading the market cap crown. As of April 18, Exxon had a market cap of $385 billion, slightly ahead of Apple's $378 billion, according to FactSet data cited by MarketWatch. Apple's surge has opened up some distance on Exxon, which now has a market value just over $405 billion.

Apple may have recaptured that crown, but it's in peril of losing a different one. Samsung (OTCMKTS:SSNLF) already has a dominant lead over Apple in smartphone market share – and it may soon overtake Apple in smartphone profits, according to analyst Michael Walkley of research firm Canaccord Genuity.

Combined, the two companies accounted for all the mobile handset industry's operating profits in the first quarter of the year, according to Walkley, with Apple capturing 57% of profits and Samsung taking 43%.

That mix is already tilted more toward Samsung than the results for all of 2012, when Apple posted 69% of the industry's operating profit and Samsung had 34%. (Those figures add up to more than 100% because players like Nokia (NYSE:NOK), Motorola (NASDAQ:GOOG) and Sony (NYSE:SNE) posted operating losses.) In the first quarter of 2012, Apple accounted for 74% of the industry's operating profit while Samsung got 26%.

This could be the quarter when Samsung overtakes Apple. "During the June quarter, we believe softer iPhone sales combined with strong Samsung Galaxy S4 sales could result in Samsung surpassing Apple for the top share of handset industry profits," Walkley writes in his industry overview this week.

As Apple already knows, and Samsung may learn eventually, uneasy lies the head that wears the crown.

Editor's Note: This article by Yuval Rosenberg originally appeared on The Fiscal Times.

For more from The Fiscal Times:


Why Bill Miller Turned Bullish on Apple

Apple Vs. the US Government: Whose Bonds Are Safer?

10 Top-Earning Hedge Fund Billionaires

Follow The Fiscal Times on Twitter @TheFiscalTimes.

No positions in stocks mentioned.
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