Samsung Electronics reported overall Q4 operating profits of 5.29 trillion won ($4.9 billion)— a 36 percent year-over-year drop— but its Mobile division suffered a 64.2 percent drop in profits, falling from $5 billion in the year ago quarter to $1.8 billion in the December quarter.

Apple's overall operating profits for the quarter were $24.2 billion, up 36.9 percent over the year ago quarter. That means Samsung Mobile is now earning less than 7.5 percent of Apple's profits while still shipping more phone units. Samsung Mobile is now earning less than 7.5 percent of Apple's profits while still shipping more phone units

Apple's net (after tax) profits were $18 billion for the quarter, provisioning $6.4 billion for tax payments. Samsung reported just $230 million in income taxes, an effective tax rate of 4.5 percent.

Apple's effective tax rate is 26.4 percent. Apple pays so much more in taxes that some pundits in 2013 confused Apple's net income with Samsung's operational income, incorrectly reporting that Samsung had earned more than Apple.

Samsung still hasn't paid Apple the nearly $1 billion judgement it was ordered to pay back in 2012 for patent infringement. However, it reported a $4.79 billion drop in mobile profits last quarter and an additional $3.2 billion decrease in the winter quarter, meaning that $7.2 billion of Samsung's profits have vanished over just the last six months of 2014 compared the same period in 2013.

Profit contribution from Samsung's smartphones collapsed in half within 2014

Samsung reported that while its overall sales were only down just slightly more than 11 percent over the year ago quarter, its mobile device revenues were down by 23.2 percent.

That was exaggerated into a 64.2 percent drop in mobile profits, because its lost sales where primarily among its higher end Galaxy S and Note product lines where it makes most of its profits.

That's a critical problem for the company because most of its profits have been coming from its IT & Mobile Communications (IM) group, which is roughly comparable to Apple's operations. Other divisions of Samsung Electronics include its CE group that sells TVs and appliances (which remained flat year-over-year) and its DS division that includes sales of display panels, semiconductors and memory components (up 4.2 percent over the year ago quarter).

At the beginning of 2014, Samsung IM was contributing 70 percent of the company's profits, primarily from smartphone sales, specifically from sales of its higher end Galaxy S and Note devices. Mobile division sales, which also include Samsung's Chromebooks, Windows products and Galaxy Tab tablets, currently account for only 37 percent of the company's profits.

Samsung notes a black hole in the Galaxy

The company's earnings release noted that within the IM group, "despite slight decline in smartphone shipments QoQ, earnings improved due to efficient cost management and increase in revenue from improved product mix."

Samsung's IM profits were indeed up nearly 12 percent over the previous quarter, when then company described a "slight growth in shipments" while seeing its mobile group profits plummet by 73.9 percent.

The company noted "ASP [average selling prices] improved due to increase of high-end product portion, mainly driven by global expansion of [Galaxy] Note 4," but in the launch quarter of Samsung's most expensive phone, its financial summary made no comment on the 64.2 percent profit plunge compared to the previous Note 3 launch. $7.2 billion of Samsung's profits have vanished over just the last six months

In the previous quarter, Samsung said its phone shipments were "driven by mid to low-end products," adding that its Note 4 release only contributed a "marginal increase" due to being released at the very end of the quarter. That makes the company's winter quarter results particularly devastating, because even at the apex of Note 4 sales the flagship phablet wasn't able to reverse the implosion of the company's mobile sales.

Samsung stated that its "tablet shipments increased QoQ with Tab4 sales growth," but non-phone tablets weren't enough to rescue the quarter's results either. Samsung's tablet business is not very profitable.

Looking forward over 2015, the company guided, "expect smartphone competitions to intensify amid the demand growth driven by LTE and emerging market," and "expect tablet growth to continue with mid to low-end demand."

It also stated that the company has a "focus on increasing smartphone shipments and securing profitability with new product portfolio."

Specific to the March quarter, Samsung set expectations low, warning, "expect decrease in smartphone and tablet demand under weak seasonality" and said it aimed to "strive to improve earnings with smartphone shipments growth due to the expansion of A series [middle tier phones], etc."

Samsung's second lowest profits since 2011

A report by Korea JoongAng Daily noted that the previous quarter had been the first where Samsung had earned less than 5 trillion won since Q3 2011. This quarter, Samsung just exceeded that level with profits of 5.29 trillion won, but the results still remain much lower than any point over the last two years (apart from Q3).

The paper cited Lee Se-chul, an analyst at Woori Investment & Securities, as saying "Samsung's smartphone performance is declining, and as the market is entering a phase of maturity, it is not easy for the company to come up with products differentiated from others."