Apple vs. Samsung: More Than Meets the Eye

NEW YORK ( TheStreet) -- Apple ( AAPL) and Samsung remain the talk of the tech world as the two titans battle for mobile supremacy. The world may have reacted differently to Apple and Samsung's respective earnings this week, but there's more to the numbers than meets the eye.

Samsung's fourth-quarter net profit rose 76% to $6.6 billion, as "solid sales" of the Galaxy S3 and Galaxy Note 2 helped boost results. The Korean firm has been one of the few Android-based handset makers to earn significant money, as it goes up against the Apple behemoth in smartphones and tablets. Samsung has been able to do this because it offers something close to what Apple offers with its iOS ecosystem, even in a fragmented Android market. Android is owned by Google ( GOOG).

Most others handset makers, including Research In Motion ( RIMM), Nokia ( NOK) and others have struggled to turn profits, as consumers increasingly pick iOS (Apple) or Android.

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For most of 2012, Apple could do no wrong, dominating mindshare and seeing its stock price appreciate nearly 70%. The Cupertino, Calif.-based firm continued to turn out mind boggling results and analysts kept raising estimates. Samsung, though, was hardly lying in the woods, and kept the pressure on Apple, with new products. Consumers took notice and the flagship Galaxy S III started to take off in sales. Apple also had a busy year, refreshing several major products in a short timeframe, including the iPhone 5, iMac, Mac mini, iPad. The company also introduced the iPad mini. This, however, may have led to some consumer malaise, with customers getting "bored" of Apple products, despite Apple's ongoing innovation ending.

Since the iPhone 5 went on sale on Sept. 21, Apple shares have taken a sharp downturn, falling more than 35% as hedge funders like David Einhorn and others cut their stake in the tech giant.

AAPL Chart AAPL data by YCharts

It seems that Samsung, which reportedly shipped 63 million smartphones in the fourth-quarter, according to Strategy Analytics, is the new king of mobile tech. Apple's now the underdog as its stock continues to sink. It doesn't matter that Apple sold 47.8 million iPhones in its most recent quarter, or that it earned $13.81 per share. Apple is yesterday's news, according to some critics.

Despite the troubles, though, all's not as rosy as it seems for Samsung, and not as bleak as it seems for Apple. In its forward guidance, Samsung noted that it expects the global smartphone market to decelerate in the first-quarter of 2013, calling it "pacified." Apple's obviously aware of this trend, but made no mention of it in the company's somewhat peculiar guidance this week. Samsung's already the dominant player in China, where it owns 29% of the market, according to research firm IDC. Apple is second, owning 21.8%, but there's one major caveat. Apple has no official relationship with the world's largest mobile carrier, China Mobile ( CHL). Samsung, however, does.

Apple's certainly working to change this, as it realizes the importance of China for the growth of the company. Apple CEO Tim Cook and China Mobile Chairman Xi Guohua recently discussed "matters of cooperation." Earlier this week Apple also broke down revenue from Greater China (China, Hong Kong and Taiwan) for the first time, which came in at $6.83 billion for the quarter, up 67% year-over-year. Sequentially it looks a little worse, up just 26%, but the iPhone 5, fourth-generation iPad and iPad mini were not released in China until mid December.

On the earnings call, Cook noted that Apple's performing better than the local market. "In terms of the geographic distribution, we saw our highest growth in China and it was into the triple digits, which was higher than the market there. And so, I would characterize it as we are extremely pleased." He noted Apple has much, much, more to do China, with only 11 Apple Stores, adding that many more will be opened.

Apple has become the underdog in this fight, with Samsung now taking the mobile crown. Apple, of course, has been the underdog before, almost going bankrupt in the late 1990's. Perhaps that's why it hoards its enormous $137 billion cash hoard.

Both companies continue to dominate the mobile market, with 51% of handsets sold in the fourth-quarter, according to IDC. For now, though, Samsung has all the momentum and Apple can seemingly do no right.

History shows us that it's wrong to bet against Apple long-term and that's without the potential upside of "one more thing."

Interested in more on Apple? See TheStreet Ratings' report card for this stock.

-- Written by Chris Ciaccia in New York

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