South Korean Samsung Electronics has registered a first profit drop in the past nine quarters. Lower prices for technology, especially in Asia, have cost Samsung dearly.
Increased competition and price pressure
The full quarter and full year results will only arrive 24 January, but a Samsung prognosis expected turnover to drop to 59 trillion won, some 40.5 billion euro. Analysts had expected a 42.3 billion euro turnover. The fourth quarter’s operational profit will dip to 5.7 billion euro, half a billion lower than the same quarter last year and nearly a fifth below analysts’ expectations of 6.9 billion euro profit.
It is unclear why profits dropped, because the South Koreans have not divulged anything (officially), but analysts point to the increased smartphone competition from the upper end of the market where the new iPhone 5s slowed down the Galaxy S4’s sales. The lower end of the market also impacted sales, with the increased competition from cheaper Chinese brands, Huawei to name just one.
Samsung is also one of the world’s largest television manufacturers, another sector in trouble. 2014 could remedy that situation, as a year with a grand football tournament usually benefits television sales. The trend of lower prices for electronics is also hampering Samsung’s profit, which may have had its effect well before this past fourth quarter. Samsung’s record profit in the third quarter was mainly because of a surge in semiconductors (chips).
(Translated by Gary Peeters)