Samsung Electronics has reported operating profit of $3.9bn for the third quarter of 2014, down by 60% compared with the same period in 2013.
Sales for the quarter were also down compared with the third quarter in 2013, falling by nearly 20% to $44.6bn, mainly due to the poor performance of Samsung’s smartphone business.
Samsung’s net income fell by 49% to $4bn.
But the company’s revenue of $44.9bn was in line with preliminary company estimates and beat analysts’ expectations, pushing the share price up by 2% in after-hours trading, reports CNN Money.
However, Samsung’s share price has fallen by nearly 20% since the start of 2014.
Analysts said Samsung has lost market share to rivals like Apple at the higher end and China's Xiaomi and Lenovo at the lower end.
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Some analysts said sales of Samsung’s Galaxy S5 smartphone were hit by the fact many consumers waited until the launch of the iPhone 6 to upgrade their smartphones.
Samsung’s market share fell to 23.8% in the third quarter compared with 32.5% in 2013, according to the International Data Corporation (IDC).
Samsung said it expected competition to intensify further, but also expects growth for the recently launched Galaxy Note 4 and new middle-end smartphone models.
The South Korean firm said the year-end surge in competitor smartphone launches "may require a potential increase in marketing expenses associated with year-end promotions".
Analysts said increased competition and saturation in the smartphone market has made Samsung more reliant on sales from other parts of its business, such as semiconductors.
Samsung said it cautiously expects earnings to increase in the fourth quarter when it plans to ship more TV products.
The company also plans to shore up its smartphone business by focusing on cheaper smartphones and flexible displays for high-end phones.
In an earnings conference call, the head of Samsung’s mobile communications business Kim Hyun-joon said the low-end smartphone market is still growing rapidly.
Samsung aims to exploit the opportunity by improving cost competitiveness, he said.