Samsung issues profit warning as rival Apple muscles in on China

Investors fast ditching stock in Korean manufacturer

Slowing demand for its high end smartphones has forced electronics giant Samsung to warn that Q4 profits will probably be less than expected, with sales in China hit by Apple’s new incursion into the region. As originally anticipated by GoMo News here last October [2013], Apple has since forged a pact with China Mobile – the world’s largest carrier with 750 million subscribers – to market its iPhones from this year [2014], denting the prospects for arch rival Samsung. But adding to Samsung’s woes is a stronger domestic currency which could mean the cost of its smartphones abroad rising steeply at a time when average selling prices are declining.

In an interim update early today [7th January 2914], the South Korean manufacturer warned that operating profit for the three months to December would be about $7.8 billion, down 18 per cent from the previous record quarter.

If correct, it will be the company’s lowest earnings figure for more than a year.

Meanwhile analysts suggest sales of Samsung’s flagship Galaxy S4 phone slowed sharply in the fourth quarter after Apple launched its latest iPhone 5S in September [2013].

Meanwhile its large-screen Galaxy Note3 smartphone could equally lose appeal once Apple launches similar-sized phones, expected later  in 2014.

Smartphone sales currently account for nearly two-thirds of Samsung’s operating profit and the steady decline has prompted investors to put their money elsewhere, with its shares dropping 10 per cent over the past fortnight, hitting a four-month low last week.

About Dave Evans

Dave Evans is a long established commentator on both the IT and cellular industries. His current focus is on share price trends within the sector. You can email him here
This article was published in Apple, China, Financial, Samsung, iphone, mobile news and tagged , , , . Bookmark the permalink.

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