Samsung's Q4 growth surprises analysts, bodes well for smartphones

Samsung is proving once again that a strong brand matters in the smartphone market. The company's fourth quarter results show operating income jumping 50 percent compared with the same period a year earlier. The results were surprising because of the Galaxy Note 7 recall last year that many assumed had dealt serious damage to Samsung's reputation. Yet, the company still saw strong sales of lower-end smartphones that have depleted Samsung's inventory to below average.

The strong sales are not primarily a product of the comoany's smartphones segment, however. Higher memory chip prices this year and strong OLED sales were the biggest contributors to Samsung's growth. This does not diminish the good news for Samsung on the smartphone front, though. A survey after the Note 7 recall found that 86 percent of Samsung owners would still consider the brand for their next smartphone. Therefore, Samsung is still a strong brand with smartphone consumers.

The other good news for the smartphone market generally is that much of the demand for chips and OLED displays is coming from other handset makers. Apple is one high-profile Samsung chip customer. While the smartphone market is largely saturated outside emerging markets at this point, Samsung's sales paint a rosier picture than some might have assumed. The days of double digit global growth are over, but everyone still needs smartphones.