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Samsung Gets Ahead in Handsets by Not Phoning It In

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Trisha Lewis

SEOUL—The conventional wisdom is that smartphones have become commodities: ubiquitous, interchangeable slabs of metal and glass whose falling prices spell disaster for companies that have come to rely on selling them at high prices.

With its preliminary second-quarter earnings numbers, Samsung Electronics Co. is showing that, even if that is the case, there is still plenty of money to be made selling handsets that can stand out from the pack.

On Thursday, Samsung said it likely earned 8.1 trillion Korean won $7.00 billion in the three months that ended in June, a 17% increase from a year earlier and the biggest quarterly operating profit the technology giant has recorded since early 2014, during the glory days for smartphone makers.

The results are in contrast to those of longtime rival Apple Inc., which in April reported its first quarterly revenue decline in 13 years, raising questions about the sustainability of smartphones as a profit engine at a time when Chinese handsets can offer many of the same specifications, often at a fraction of the price.

For Samsung, the second-quarter earnings surprise highlights the Suwon, South Korea-based company s ability to bounce back after a pair of underwhelming flagship smartphone releases the last two years.

While Samsung won t break out the details of its second-quarter earnings until the end of the month, analysts have attributed the strong operating profit to the success of the Galaxy S7, which the South Korean technology giant introduced in early March to favorable reviews.

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Trisha Lewis
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