Samsung profits fall thanks to poor smartphone sales

Things aren't looking too hot for Samsung right now.

Things aren’t looking too hot for Samsung right now.

2014 wasn’t a great year in Samsung land. The company has just issued its earnings guidance for the year’s fourth quarter — and the news isn’t good.

With operating profit standing at 5.2 trillion won (around $4.74 billion) for the quarter, the company’s overall profit for the year will likely come in at 25 trillion won: its lowest figure in three years.

A big part of this is the continued decline of its Samsung’s division, which has plummeted while rival Apple has soared.

The company lost market share for three consecutive quarters up until July-September, and analysts think the same may have happened in the October-December months, thanks to the extra competition Samsung now faces.

Part of this competition is from long-time rival Apple, which saw its larger iPhone 6 and 6 Plus handsets generate record sales for the Cupertino company. Samsung, meanwhile, wildly overestimated the appeal of its Galaxy S5 handset, missing projections by 40-50 percent.

The company is also being squeezed at the lower-cost end of the market by companies like Xiaomi, which are rapidly expanding in key growth markets such as China and India. Having recently announced a new valuation of $46 billion — making it the most valuable tech startup in existence — Xiaomi Technology just announced that it sold a whopping 61.1 million smartphones in 2014.

Taking all of this into account, Samsung’s mobile business has fallen from a high of 68 percent of the company’s overall profit in 2013 to just 44 percent in Q3 of last year.

While the company isn’t only a smartphone maker, it’s pretty clear that something needs to change drastically in 2015. And sooner rather than later.

Source: Reuters

Via: TechCrunch