South Korean electronics concern Samsung suffered a 49 % blow to its net profit in the past quarter: particularly its smartphone division is under pressure.
Bad news confirmed
Samsung's third quarter was quite abysmal: turnover was at its lowest in three years (35.65 billion euro, while it managed 44.38 billion euro the year before) and net profit nearly halved, from 6.19 billion euro down to 3.17 billion euro. The results confirm the profit warning Samsung had issued several weeks ago.
Its smartphone division was responsible for the bulk of the drop, despite selling more phones than in the third quarter of last year. However, older models were sold at lower prices ("a weak product mix", the company said) and that has pulled turnover down. In the end, the division's profit plummeted 73.9 %, its worst since 2011's second quarter.
"Focus on mid-to-low segment"
Market research firm IDC had already divulged that Samsung is struggling to fight off Chinese price breakers like Huawei, Xiaomi and Lenovo. Even Apple's new iPhone 6 models are a thorn in its side.
Senior vice president Kim Hyun-Joon hopes to turn the tide through an increased focus on the mid-to-low segment as the Galaxy Note 4 only contributed "marginally" to the quarterly results. "The mid-to-low end market is growing rapidly, and we plan to respond actively in order to capitalise on that growth", he said. The board also expects the fourth quarter holiday season to help increase demand.