News

Samsung expects profits to fall

Warwick Ashford

Samsung Electronics has said it expects profits to fall in the fourth quarter of 2013.

The firm expects an operating profit of 8.3tn won (£4.8bn) for the quarter, down 18% from the previous quarter and 6% down compared with the same period a year ago.

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The earnings guidance did not give a reason for the drop, but analysts say the most likely reason is the fall in demand for high-end smart phones in advanced countries.

As the growth in the smartphone sector matures, and suppliers seek expansion in emerging economies, prices and operating margins have been coming down, Manoj Menon of Frost & Sullivan told the BBC.

Samsung’s growth in recent years has been largely driven by the success of its smartphone division, but other analysts said Samsung's smartphone business making Galaxy smartphones is less lucrative than before because of higher marketing costs.

The competition in the smartphone market has also increased with new products from rivals such as Apple, Nokia and HTC.

Samsung's smartphone business also faces more competition in China, according to the Guardian.

Later this month, Apple will begin selling iPhones through China Mobile, which could threaten Samsung's growth in the smartphone market there.

Samsung held 21% market share in China's smartphone market, up from 14% a year earlier, while Apple's share declined to 6% from 8%, according to research firm Canalys.

Samsung will disclose details of its earnings including net profit later this month.


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