Samsung misses earnings estimates; profits decline as as Apple iPhones win sales

“Samsung Electronics Co. posted its slowest profit growth since 2011 as new Apple Inc. iPhones lured high-end customers and gains in the Korean won curbed the value of overseas sales,” Bloomberg News reports. “Asia’s biggest technology company is facing a squeeze on profit margins as new iPhones and cheaper devices made by Lenovo Group Ltd. and Huawei Technologies Co. crimp growth of Samsung’s Galaxy devices. Currency moves cut about 700 billion won from earnings, and the company made bonus payments to workers and boosted marketing as it prepares to release its new S5 high-end device to battle Apple.”

“‘Earnings will remain stagnant this year as the explosive growth of the past two to three years seems to have ended,’ said Lee Sun Tae, a Seoul-based analyst at NH Investment & Securities Co. ‘Although the lower-end smartphone market will continue to grow, the scale of profit from that segment doesn’t compare to the high-end market so the growth seems limited,'” Bloomberg News reports. “The company also paid a special bonus of 800 billion won to workers to celebrate the 20th anniversary of Chairman Lee Kun Hee’s new management strategy, it said.”

“Fourth-quarter operating income at Samsung’s mobile unit, the company’s biggest profit driver, was 5.47 trillion won, little changed from a year earlier and down from a record 6.7 trillion-won profit in the quarter ended Sept. 30, the company said,” Bloomberg News reports. “Apple shipped 33.8 million smartphones in the quarter ended Sept. 30, the iPhone maker said. The company started selling the iPhone 5s and the cheaper 5c in September. Samsung also faces a new threat from Apple after the Cupertino, California-based company struck a distribution deal with China Mobile Ltd., the world’s biggest carrier by users. Samsung is the top seller in China, where large-screen devices such as its 5.7-inch Note have won customers who prefer one device for checking e-mail, browsing the Web and watching videos. The iPhone has a 4-inch screen.”

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MacDailyNews Take: Aww, sob.

23 Comments

    1. Did I read that correctly?
      The iPhone has a 4 inch screen?
      Is that why MDN is sobbing?
      Because even if they don’t have a 5 inch screened iPhone, they are still swiping the majority of smart phone sales and thus leaving very little money on the table for the ass wipe galaxy sized phones??
      Aaahhh! there, there MDN, don’t cry, it all be over soon bar the shouting of “I TOLD YOU SO”, from the I told you so merchants. Thereafter which you will get your wish when a new slightly larger iPhone is released, the landscape sub-5 inch screened iPhone depending on how you orient it.

    2. Investors love Google because they feel the company has unlimited growth. Android OS in every device you can imagine. Investors believe Google can monetize every device that runs on Android. That isn’t working out all that well for Microsoft’s embedded OS.

      Investors get excited over perceptions and tend to ignore actual money being made. It’s a concept I can’t seem to grasp when I look at such high valuations. It doesn’t have to make sense, though. It’s just used to make certain shareholders wealthy. Netflix has a market cap of only $24 billion and a share price of nearly $400. That’s just incredible. Exactly why is Netflix worth all that much money?

    1. I too have decided to boycott Samsung. It’s a shame too, they make decent TV’s, but I refuse to give them one dime of my money no matter how good their products might be. They are a company with no honor or shame and are a bunch of thieving criminals in my book. Now if Apple could just divest itself from using them as a component supplier.

      I encourage people to tell their friends, families and associates to not give any of their business to this despicable company.

  1. … and on this news Apple stock will go down because the market is clearly saturated, Samsung stock will go up because the S5 will reverse this market loss. Soon they will be pushing Apple out the door again. /s

  2. I foresee a much lower rate of interest in their next flagship as the world awaits Jony Ive’s plus-sized iPhone 6. Now that we have confirmation from the reliable WSJ that the dawn of the “iPhone Plus” is finally upon us, it will cast a larger than usual shadow over every big screen Droidy release this year. The king of the premium large screen segment will quickly take his throne after leaving the likes of Samsung, Motorola and HTC pillaged and plundered in his wake. All hail iPhone Khan.

  3. “The company also paid a special bonus of 800 billion won to workers to celebrate the 20th anniversary of Chairman Lee Kun Hee’s new management strategy, ”

    Theft?

    1. I was going to make a joke about how the money was stolen from the honor box in front of the bagels, but I forgot this is Samsung we’re talking about. That box is always empty,

      ——RM

  4. It’s clearly not easy for a company to maintain momentum quarter after quarter. Last year Samsung pulled out all stops to break Apple’s iPhone dominance and it definitely worked for a while. However it turned into a costly move when Galaxy S4 sales didn’t meet expectations. They got stuck with a huge marketing bill and lots of low-end, low margin smartphones. In other words, Samsung caught a touch of Nokia-itis. High market share certainly has its risks if your high-end, high margin models don’t sell well.

    What annoys me is that Wall Street doesn’t care about Apple’s profits but get all excited when Samsung moves tens of millions of low-end smartphones and so happy to show how Samsung smartphones are outselling iPhones by huge amounts. I’m sure Wall Street will focus on something else now which will likely be how Apple’s iPhone is still losing market share to Android OS as a whole. They’ll just ignore individual companies and focus on the OS platform to make it look like Apple is still on the rocks.

    A new Galaxy flagship model is not going to help Samsung very much. The S4 was about a good a flagship model as Samsung could manage. If it didn’t sell well it was because it was more than most Android users needed. Coming out with a more feature-laden S5 isn’t going to help high-end sales. I’m willing to bet that most consumers will end up getting the older S4 when carriers start practically giving them away like they did the earlier SIII.

    1. If it didn’t sell well it was because it was more than most Android users needed.

      Yep, that’s pretty much it in a nutshell.

      Samsung is finding itself” middled”. They’re not making sufficient ground on Apple in the high-end device market, and now low-end manufacturers are nibbling away at their market from underneath.

      Just because it’s such a good point: We all know Android users, right? How many of those Android users bought their phone or tablet because they had to get the best? I don’t know a single one. Every Android user I’m familiar with got the phone or tablet because it was a “good deal”. They talk about how much they paid for the device, not how good it is.

      Ironically, one such Android user I know bought an S4, but not because it was such an awesome phone. It was because the mobile provider was having a sale!

      ——RM

  5. “celebrate the 20th anniversary of Chairman Lee Kun Hee’s new management strategy”

    That was the “Copy Sony” strategy, that later morphed into the “Copy Apple” strategy.

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