Samsung Electronics heads for annual profit drop
Samsung Electronics Co Ltd (005930.KS) is heading for its first annual earnings drop since 2011 after it revealed its July-September profit would be the lowest in more than three years and said short-term prospects for smartphones were uncertain.
The world’s smartphone leader has seen its global market share decline in annual terms for the past two quarters, according to Strategy Analytics, out-classed by Apple Inc’s (AAPL.O) iPhones in the premium segment and undercut by Chinese rivals like Lenovo Group Ltd (0992.HK) and Xiaomi Inc at the bottom end.
“Considering the operating profit guidance, it looks like the company dealt with unsold inventory issues during the third quarter,” Alpha Asset Management fund manager Hong Jeong-woong said. “I think Samsung’s earnings are at a turning point.”
Samsung said that although “uncertainty” persisted in the mobile business, which accounted for nearly 70 percent of its 2013 operating profit, it “cautiously expects” higher shipments of new smartphones and strong seasonal demand for TV products.
While smartphone prices will generally trend lower as the cheaper end of the market grows, Roh said Samsung should be able to make up for lower margins with stronger volumes once it revamped its product lineup.
Source: Reuters- Samsung Electronics heads for annual profit drop
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