Samsung’s Profit Rises, but So Does the Competition

Samsung, which is based in Suwon, South Korea, said net income rose to 7.77 trillion won, or $6.9 billion, from 5.19 trillion won a year earlier. Sales rose to 57.46 trillion won, from 47.6 trillion won.

But the report showed a decline in earnings from the first quarter in Samsung’s mobile phone business despite the introduction of a new flagship model, the Galaxy S4.

Though the S4 has been selling at a brisk pace, it has fallen short of some analysts’ expectations. Promotional events like an introductory gala for the S4 at Radio City Music Hall have driven up marketing costs, while rivals continue to roll out competing models.

“The strong growth streak for the smartphone market is expected to continue in the third quarter, albeit at a slower pace,” Samsung said in a statement.

Market reaction to the report from Samsung was muted because the company issued an earnings forecast earlier this month; the results reported Friday were broadly in line with that outlook, though below previous expectations.

The results from Samsung follow the earnings report from the company’s chief rival, Apple, which showed similar trends in the smartphone business.

Apple reported earnings that beat Wall Street expectations, but its profit declined from a year earlier and its revenue was flat. While Apple’s posted strong iPhone sales in the United States, the company showed weakness in China and in sales of iPads.

In recent months, the shares of Apple and Samsung have been hammered by investors, who worry that even as the companies report continued growth in sales of smartphones, they will struggle to maintain their momentum.

“In a way, Apple and Samsung have become victims of their own success,” Pete Cunningham of the research firm Canalys said before the Samsung results were released. “When these companies report many billions of profits every quarter, it’s hard to say they are doing anything wrong.”

Many say the high end of the smartphone market, which Samsung and Apple dominate, is looking saturated. Most wealthy consumers in developed markets already own such devices, so growth is increasingly occurring in lower-price brackets in developing markets, where Apple does not compete.

Samsung, with a broader product range, may be better positioned, analysts say, though it faces stiff competition at the low end of the market from Chinese makers.

For expensive phones, the companies face renewed competition from Sony, HTC and Nokia, though analysts say innovations in smartphone design and technology are becoming more incremental.

“If you combine all these players and look at what they are doing, it’s hard for Samsung or Apple to keep growing market share,” said Bryan Wang, an analyst at Forrester Research. “But the expectations for both companies are still high.”

IDC, a research firm, said Samsung’s share of the smartphone market slipped to 30.4 percent in the second quarter, from 32.2 percent a year earlier.

Samsung’s smartphone sales rose by 43.9 percent, outpacing Apple, which showed a 20 percent gain. But smaller smartphone makers that focus on lower-cost devices did even better, with Lenovo and LG, for example, more than doubling their sales.

“The smartphone market is still a rising tide that’s lifting many ships,” said Kevin Restivo, senior research analyst at IDC, in a statement. “Though Samsung and Apple are the dominant players, the market is as fragmented as ever. There is ample opportunity for smartphone vendors with differentiated offerings.”

While Samsung does not break out the number of devices it sells on a quarterly basis, another research firm, Strategy Analytics, estimated that the company shipped 76 million smartphones in the second quarter, 56 percent more than a year earlier and more than double Apple’s total of 31.2 million.

With growth picking up in the low end, Strategy Analytics said, the smartphone market over all is expanding faster than it was a year ago. That helps Samsung in another way, because the company also is the world’s biggest producer of semiconductors, an important component in smartphones and other electronic devices.

Samsung said operating profit in its semiconductor division rose to 1.76 trillion won from 1.03 trillion won a year earlier, as it experienced strong demand from its own mobile business, as well as from other phone makers to which it supplies chips.

But Samsung said its television business was hurt by sluggish demand in Europe, where an economic recovery has struggled to take hold.

As Competition Wanes, Amazon Cuts Back Discounts

“At this point, people need an inducement,” said Mr. Hollock, a retired corrections official. “But instead of lowering the price, Amazon is raising it.”

Other writers and publishers have the same complaint. They say Amazon, which became the biggest force in bookselling by discounting so heavily it often lost money, has been cutting back on its deals for scholarly and small press books. That creates the uneasy prospect of a two-tier system where some books are priced beyond the reach of an audience.

There is no way to track the movement of prices on Amazon, so the evidence is anecdotal and fragmentary. But books are one of the few consumer items that still have a price printed on them. Any Amazon customer who uses the retailer’s “Saved for Later” basket has noticed its prices have all the permanence of plane fares. No explanation is ever given for why a price has changed.

Bruce Joshua Miller, president of Miller Trade Book Marketing, a Chicago firm representing university and independent presses, said he recently surveyed 18 publishers. “Fourteen responded and said that Amazon had over the last few years either lowered discounts on scholarly books or, in the case of older or slow-selling titles, completely eliminated them,” he said.

When the University of Nebraska Press brought out a bibliography of the novelist Jim Harrison four years ago, Amazon charged $43.87. The price this week: $59.87.

Rob Buchanan, a sales coordinator for the press, said the $65 list price of the book had not changed, nor had the price the publisher billed Amazon. “I can’t think of a reason on our end why they’d be charging more.”

Amazon says it is not belatedly trying to improve its anemic profit margins.

“We are actually lowering prices,” said Sarah Gelman, an Amazon spokeswoman. “We pay for these price decreases with relentless focus on improving our execution — and this commitment to low prices is one of the reasons our print books business continues to grow.”

Offered a list of random titles whose discounts had dropped, she said she would not talk about specific books. They included David Foster Wallace’s essay on John McCain, which went from 20 percent off to 10 percent. Ellen Galinsky’s “Mind in the Making” went from 32 percent off to 24 percent. Jim Harrison’s “Songs of Unreason” dropped from 32 percent off to 16 percent.

Higher prices have implications beyond annoyed authors. For all the hoopla around e-books, old-fashioned printed volumes are still a bigger business. Amazon sells about one in four printed books, according to industry estimates, a level of market domination with little precedent in the book trade.

It is an achievement built on superior customer service, a vast range of titles and, most of all, rock-bottom prices that no physical store could hope to match. Even as Amazon became one of the largest retailers in the country, it never seemed interested in charging enough to make a profit. Customers celebrated and the competition languished.

Now, with Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished, for many consumers there is simply no other way to get many books than through Amazon. And for some books, Amazon is, in effect, beginning to raise prices.

Stephen Blake Mettee, chairman of the board of the Independent Book Publishers Association, said that Amazon was simply following in the tradition of any large company that gains control of a market. “You lower your prices until the competition is out of the picture, and then you raise your prices and get your money back,” he said.

Authors like Mr. Hollock say they feel helpless about Amazon’s control over their fate. Mr. Hollock says he has called Amazon several times to ask why the price of his book was going up, and never received an answer that made sense.

“Amazon is doing something vitally important for book culture by making books readily available in places they might not otherwise exist,” said Ted Striphas, an associate professor at Indiana University Bloomington. “But culture is best when it is robust and decentralized, not when there is a single authority that controls the bulk of every transaction.”

When Mr. Striphas’s book, “The Late Age of Print: Everyday Book Culture from Consumerism to Control,” first appeared in paperback in 2011, Amazon sold it for $17.50, the author said. Now it is $19.

“There’s not much competition to sell my book,” Mr. Striphas said. “The conspiracy theorist would say Amazon understands this.”

E.U. Competition Chief Texting With the Enemy

Joaquín Almunia sometimes sends Eric E. Schmidt a text.

Like his predecessors, Mr. Almunia has the power unilaterally to decide to block mergers or fine companies billions of dollars. But where he differs is in how comfortable he is in personally reaching out to executives across the table — or the ocean — to negotiate settlements that avoid long drawn out battles.

“I have an open phone line, or e-mail line, or SMS line at any moment,” Mr. Almunia said during an interview Monday, adding that by using the available technology, “we tend to understand every day, better, these markets.”

Mr. Almunia, 64, served as the European Union’s commissioner for economic and monetary affairs before being appointed four years ago as the bloc’s competition commissioner. The post is likely to be his last job in Brussels and he does not foresee a return to politics in Spain, where he led the Socialists to defeat in 2000 before resigning as party leader.

But the formal complaint that recently hit his desk, focusing on how Google runs its mobile software business, is the latest sign that Mr. Almunia remains the go-to figure for antitrust enforcement in the world’s technology sector.

That complaint, filed by a coalition of companies including Microsoft and Nokia, accuses Google of using the Android mobile operating system to promote its own products and services in the majority of smartphones that are being sold to consumers.

Mr. Almunia still must decide whether to take up the new complaint, which landed just as he appeared to be reaching the final stages of settlement talks with Google over the way it conducts its search and advertising business. But it would be surprising if Mr. Almunia declined to pursue the case given the rising importance of mobile computing.

In recent years, the European Commission has become a defender of fair play in computing and communications, even as regulatory bodies with far more experience — notably those in the United States — have grown squeamish about using antitrust law to pry concessions from some of the world’s most dynamic companies.

Yet there is a paradox about the way Mr. Almunia has managed his vast regulatory powers that allow him, unlike his U.S. counterparts, to decide punishments without first obtaining judicial approval. In a departure from previous competition commissioners, Mr. Almunia has made a point of avoiding public showdowns with chief executives, or seemingly endless litigation.

Mr. Almunia has made negotiation, rather than confrontation, a hallmark of his term in office in order to avoid dust-ups with U.S. giants like Microsoft and Intel, which were the subject of bitter, decade-long investigations. The change of approach has been most noticeable in the inquiry into Google’s search and advertising business.

Less that three years after formally opening the case, Mr. Almunia said this week that he would test proposals submitted by Google aimed at making it easier for people to distinguish when Google was proposing its own services — the strongest sign yet that the investigation into Google’s search business would end in a settlement and without a fine or a finding of guilt.

Even as his officials burrowed into the inner workings of Google’s hugely successful search and advertising businesses, Mr. Almunia met and spoke with Mr. Schmidt and telephoned other senior representatives, like David Drummond, the company’s chief legal officer, to update them.

His willingness to meet with executives to forge relationships and to gain knowledge about the sector also extends to figures like Sheryl Sandberg, the chief operating officer of Facebook. At a meeting with Ms. Sandberg in January at the World Economic Forum in Davos, the two discussed “the relationship between the search activity and the social network’s activity, but they were general conversations,” Mr. Almunia said.

Not everyone is happy with how European antitrust enforcement is evolving.

Aspirants to Legal Academe Find the Competition Heating Up

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Credit: Comstock Images

Hundreds of would-be law professors will arrive this week at the Marriott Wardman Park in Washington, dressed in conservative suits and clutching resumes and copies of the academic articles they have painstakingly researched. They will mill around nervously in the cavernous hotel lobby as they await their 25-minute interviews with law school hiring committees, which will be the centerpiece of the Association of American Law Schools Faculty Recruitment Conference -- the "law school meat market" to those in the know.

The conference happens every October, but it's unlikely to prove business as usual this time around. Legal educators predict that entry-level faculty gigs will be especially hard to come by, given the dramatically reduced entering class sizes at many schools and uncertainty about the future.

"These are extraordinary times. It's going to be a brutally difficult year, if this is the year you want to be hired," University of Arizona James E. Rogers College of Law professor Marc Miller told a group of 40 aspiring law professors during a conference in Tempe, Ariz., in September.

Approximately 142 law schools have registered to attend the AALS hiring conference -- a 14 percent decline from the 166 that attended last year and a 21 percent decrease from the 179 schools that participated during pre-recession 2007. The schools that do attend won't necessarily hire -- some use the conference to scout teaching talent for the future. (It's difficult to tell how many open teaching spots actually exist, as some schools advertise specific positions in an AALS-published bulletin but many do not.)

At the same time, the number of aspiring law professors has held fairly steady during the past five years. Thus far, 750 candidates have registered for the AALS' faculty interviews, although that number does not include the final list of candidates, which will come out in February. The total number of registrants has fluctuated between 824 and 901 in recent years, according to the AALS.

'THE STAKES ARE HIGHER'

One of those hopefuls is Brian Owsley, a magistrate judge for the U.S. District Court for the Southern District of Texas and a 1993 graduate of Columbia Law School. He attended the AALS hiring conference eight years ago, was invited to many interviews and even landed a few job offers, but he ultimately turned them down for his job on the bench. This time around, the number of law schools that granted him interviews is just a quarter of what it was eight years ago, he said.

Owsley attributes that to the slow economy, and possibly the fact that law schools prefer younger candidates who they can more easily mold. The stress was bad enough when he was a hotter prospect, he said. "This time, the stakes are higher. There are fewer interviews and fewer schools interviewing. I won't have to worry about running ragged from interview to interview."

University of Chicago Law School professor Brian Leiter, in a post on his popular Brian Leiter's Law School Reports blog, predicted during the summer that hiring would decline as cautious administrators adjust to declining enrollments. "Since salaries for teaching staff are the biggest part of a law school's budget, schools are going to proceed very cautiously before hiring new faculty," Leiter wrote. "My guess is this cutback in hiring will last at least the next couple of cycles, until the applicant pool stabilizes."

(The number of 1Ls enrolled at American Bar Association-accredited law schools declined by nearly 4,000 last year. The updated figure was not yet available for this school year, but at least 23 schools have reported declines of 15 percent or more in their 1L classes.)

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Deals Competition Turns Into Free Online Transactions Class

It started in 2009 with a first-of-its kind transactional law competition in which small teams of law students competed to negotiate the best deals for fictional clients.

The meet was popular enough that its creator, Drexel University Earle Mack School of Law professor Karl Okamoto, took the idea a step further in 2011 by launching LawMeets, a free website that presents law students with transactional simulations. The students are presented with a business scenario and then submit videos in which they offer legal advice. The videos are rated by their peers and the best are evaluated by experts, who offer video feedback for all participants to view.

With a fresh grant of $500,000 from the National Science Foundation, LawMeets in October will expand its offerings with the first in a series of free online courses that combine lectures and simulations exploring the finer points of transactional law.

Okamoto hopes the LawMeets programs will help to fill a curricular void at law schools, where many business law courses focus on legal doctrine and precedents rather than the nuts-and-bolts of deals.

"Very few of these courses talk about how to get a deal done," Okamoto said. "Even in most business organizations classes, there's limited discussion on how to form an LLC and draft an operating agreement."

The first LawMeets course, the Basics of Acquisition Agreements, will last for two weeks -- from October 23 to November 7. The course is what is known as a MOOC -- massive open online course, a technology that law schools are only beginning to experiment with.

The course will include four video lectures, four interactive simulations and two panel discussions moderated by LawMeets faculty and transactional lawyers. Participants may view the lectures online at their own convenience, although there are cutoff dates for the student video submissions.

The lectures will be delivered by Okamoto; DLA Piper partner Jay Finkelstein; University of California, Davis School of Law professor Afra Afsharipour; and Cornell Law School professor Charles Whitehead.

Sixty participants have already signed up for the inaugural class in the few days since it was announced, some as far away as the United Kingdom and Australia. Okamoto hopes that 500 students participate, but the online platform can support thousands of users, he said.

Individual students can participate, but Okamoto hopes that law professors will incorporate its mini-courses into their own classes.