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Samsung posts first profit decline in two years

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24 January 2014

Korean phone maker Samsung posted its first profit decline in two years today, as sales of its smartphone devices slowed.

Even as Microsoft beat analyst estimates with record earnings, Samsung posted $7.7 billion in operating profit for the fourth quarter today, an 18 per cent decline on the third quarter.

This comes as the company's first quarterly drop in profit in two years and saw Samsung's net earnings slip 6 per cent year on year.

The earnings dip was partly due to a decline in smartphone sales, with the firm's mobile division seeing profits slip 2.8 per cent quarter on quarter.

According to commentators this could be attributed to customers holding out for the long-rumoured Samsung Galaxy S5, which is expected to launch ahead of this year's Mobile World Congress on 23 February, or possibly because of sales taking a hit due to the launch of Apple's iPhone 5S and iPhone 5C handsets.

The Inquirer quoted Strategy Analytics' research analyst Nel Mawston as saying, a flood of Asian rivals from China and India, such as Lenovo, as well as a product refresh from Apple, were adding to Samsung's pressure at the moment.

Meanwhile, the world's biggest smartphone maker continued to keep its investment plan conservative and warned it would be difficult to lift earnings in the first quarter as demand pulled back from the year-end holiday period.

''It will be challenging for Samsung to improve its earnings in the first quarter, as the weak seasonality of the IT industry will put pressure on demand for components and TV products,'' the company said in a statement.

According to Samsung, its 2014 capital expenditure, a barometer of broader technology industry demand for manufacturing tools such as chip equipment, would be similar to 2013's 23.8 trillion won.

Operating profit at its cash cow mobile division stood flat at 5.47 trillion won, but was down 18 per cent from July-September's record 6.7 trillion won as competition from new iPhones hit sales during the year-end holiday period.





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