The biggest smartphone manufacturer by shipments in the world – Samsung Electronics Co. – said that profit fell for a fifth consecutive quarter over the last three months of 2014 amid intensifying competition in the face of Apple and Xiaomi, despite strong sales of its premium Galaxy Note 4 phablet.
According to the South Korean smartphone makers statement, operating profit decreased to 5.2 trillion won ($4.7 billion) in the last quarter of 2014, beating analysts expectations for 4.8 trillion, but also falling well behind the 8.31-trillion-won operating profit reported a year earlier.
Samsung also revealed that its sales amounted to 52 trillion in the three months ended December, which represents a 12% fall from the year-ago period.
The company did not present numbers for its net income, nor details about earnings of its units as they are expected to be reported later in January. The preliminary guidance posted today indicates a full-year operating profit estimated to about 24.9 trillion won, which would be a 32% decline year-on-year.
Samsungs results have been seriously affected by declining sales in its smartphone unit. The latter was known for being the companys major profit driver over the last few years, but the semiconductor division managed to catch up in the third quarter of 2014.
Now Samsung, which still remains the leader in the smartphone market by volume, is expected to rely on its memory-chip unit for generating earnings growth at a time when sales of its Galaxy smartphones are suffering from the stiff competition of Apple Inc. and Xiaomi Corp. in the high and mid-low segments, respectively.
One of the analysts who work at HMC Investment Securities Co. – Mr. Greg Roh commented for Bloomberg: “Apple and Chinese producers are rivaling Samsung in smartphones, but they are also its biggest customers for components, especially in memory chips. It’s about the right time for Samsung to find the sweet spot from its component businesses rather than from end-product units.”
Samsung Electronics Co. closed 0.54% higher on Thursday in Seoul at KRW1 314 000 per share. The company is valued at KRW 215 376.50 billion.
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