NEW YORK – The recent financial reports of five key technology leaders – Apple, Amazon, Microsoft, LG and Samsung – illustrate not only their current financial health but strategies they are counting on for current and future growth.
All five companies did show good demand for their products and services for the quarter, which was marked by complaints by many about a slowdown due to severe winter weather in the U.S.
Apple said gains in its revenue and net profit in the fiscal second quarter were driven by strong iPhone demand.
For the quarter, ended March 29, revenue was $45.6 billion, up from $43.6 year on year, and quarterly net profit was $10.2 billion, up from $9.5 billion year-on-year.
Apple also reported gross margins of 39.3 percent, compared with 37.5 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.
While proud of the iPhone’s results, Tim Cook, CEO, said in a company statement. “We’re eagerly looking forward to introducing more new products and services that only Apple could bring to market.”
Amazon.com made headlines by reporting double- digit sales and earnings gains for the first three months of the year, and forecasting a steep loss for the current quarter.
Net sales rose 23 percent to $19.7 billion for the period, ended March 31, while net earnings were up 31 percent to $108 million.
In North America, net sales increased 26 percent to $11.9 billion. The tally was comprised of $7.8 billion in electronics and other general merchandise, up 28 percent year over year, and $2.8 billion in media, a 13 percent gain.
Net shipping costs increased 28 percent worldwide to $980 million, and capital investment was up 39 percent to $16.6 billion as the company rolled out a series of initiatives: the Fire TV smart-TV adapter, new original video content, and additional film and TV licensing agreements for Amazon Prime, including this week’s announced HBO deal. Analysts were not pleased about the projected loss for this quarter.
Microsoft may have reported slightly lower results corporately but revenue for devices and consumer products were up in the fiscal third quarter, ended March 31.
Corporate revenue was $20.4 billion, almost flat year on year with net income at $5.6 billion, down from $6.05 billion.
Microsoft reported that devices and consumer revenue grew 12 percent to $8.3 billion.
Microsoft sold in 2 million Xbox console units, including 1.2 million Xbox One consoles, and Surface revenue grew more than 50 percent to approximately $500 million.
LG Electronics was much more profitable in the first-quarter of this year than last, with a net profit of $86.6 million, which is a 319 percent increase. Unaudited first-quarter consolidated revenues were up slightly, 1.2 percent to $13.35 billion compared with the year-ago quarter.
LG’s home entertainment division reported first-quarter revenues of $4.63 billion, a 3 percent increase from the first quarter a year ago. Operating profit of $224.8 million “exceeded expectations,” LG said, due to stronger sales of large-panel TVs and better cost structure resulting from declining material prices.
LG’s mobile communications division reported increased revenues of $3.19 billion, a 6 percent increase year on year, and the company said operating profit margins rose quarter on quarter.
LG shipped 12.3 million smartphones in the first quarter, comprising 75 percent of all phones shipped, an increase of 19 percent from the same period the previous year. LG’s shipment of 5 million LTE smartphones was the most ever in a single quarter, an increase of 79 percent year over year, accounting for 41 percent of all smartphone shipments in the quarter, compared with 27 percent for all of 2013.
The home appliance division’s first-quarter revenue was $2.54 billion was lower year over year, attributed to greater competition in North America but an improved cost structure resulted in first-quarter operating profit of $102.15 million and a profit margin of 4 percent.
Samsung reported slightly higher sales and net profits year on year in the first quarter. Although market demand for electronics devices such as smartphones and tablets in the January through March quarter is traditionally slow, profit margins for Samsung’s IT and mobile communications (IM) division were driven by strong demand for smartphones and efficient management of marketing expenses.
During the first quarter of 2014, the overall LCD market experienced an on-quarter decline in demand for TV and tablet panels as product makers reduced orders. For Samsung, earnings were impacted by cost increases related to the ramp-up of production in China coupled with the decline in ASP.
For OLED panels, weak seasonal demand led to a decline in sales for the first quarter. In the second quarter Samsung said it company will focus on leading innovation in the production of flexible panels and expanding the applications of OLED to the emerging wearable devices category.
Although market demand for both smartphones and tablets decreased during the first quarter, operating profits for the IM division rose18 percent.
Looking at the tablet business, the company maintained solid tablet sales momentum by shipping nearly 13 million units during the slowest quarter and reinforced its mid to high-end lineup, including launches of the premium Galaxy Note Pro and Galaxy Tab Pro devices equipped with 12.2-inch displays, office functionalities and PC-level performance.
The consumer electronics division posted an operating profit of 190 billion won for the quarter on revenues of 11.32 trillion won. The visual display business accounted for 7.39 trillion won of earnings.
Seasonally low demand for CE goods during the first quarter corresponded with the division’s overall sales, retreating by 21 percent quarter on quarter.
The results of these top tech companies in the first quarter highlight their obvious strengths, and some weaknesses, in their businesses.