Analyst: AAPL Raked in 53% of Smartphone Market Profits

Apple's iPhone brought in 53 percent of the profits in the worldwide smartphone market during the second calendar quarter of 2013. Samsung swallowed almost all of the rest of the market's profits, too, show that right now the smartphone market is a two horse race.

Samsung may outsell the iPhone, but Apple still takes in more profit.Samsung may outsell the iPhone, but Apple still takes in more profit.

Based on figures from Canaccord Genuity's Michael Walkley, Samsung took 50 percent of the quarter's smartphone profits, but he made the math work. "Due to operating losses from smaller scale competitors, Apple and Samsung's combined share of industry profits exceeded 100 percent," he said.

In other words, while Apple and Samsung were picking up all the cash consumers could through at them, Motorola, BlackBerry, Nokia, and other smartphone makers were reporting losses.

Apple's share of the market profits was down quarter-over-quarter and Samsung's share was up. During the previous quarter Apple took 57 percent while Samsung took 43 percent. Despite Apple's top position in the smartphone profits game, Samsung outsold the iPhone with its Android-based smartphones.

"From our July surveys, we believe Samsung and Apple maintained top share of the US smartphone market. Our carrier store surveys indicated the Samsung GS4 was the top- selling smartphone at Verizon/Sprint/T-Mobile and #2 selling smartphone at AT&T," Mr. Walkley said. "Other top-selling models included the iPhone 5 at all four tier-1 carriers, the HTC One at AT&T/Sprint, the Sony Xperia Z at T-Mobile and the Galaxy S III at Verizon."

He estimated Samsung shipped 72.5 million smartphones during the second calendar quarter, which helped the company rake in such a large part of the smartphone market's quarterly profits.

Overall, Mr. Walkley thinks smartphone sales are on the rise. He estimated first quarter sales hit 420 million worldwide, and climbed to 427 million units during the second quarter. Those sales are coming at the expense of the feature phone market, which he estimates declined by 5 percent.

The smartphone market is shifting more to premium and LTE devices, favoring Apple's iPhone 5 as well as Samsung's Galaxy S4. The iPhone 4S is leading the pack in smartphone sales in the $250 to $400 range, followed by Samsung's Galaxy S II and S4 mini.

Looking at overall smartphone marketshare, Mr. Walkley said Samsung has just over 27 percent of while Apple is sitting at 13.5 percent. Both declined a little during the quarter, but he expects Apple to see a nice rebound leading into the holiday buying season when the company refreshes its iPhone product lineup.

Mr. Walkley is maintaining his "Buy" rating and $530 target price for Apple's stock. Apple is currently trading at $451.41, down 1.91 (0.42%).