Samsung expects to miss analyst profit estimates for Q4 2013

Electronics giant expects to record an 18 percent drop in operating profit due to a softer smartphone market and increased competition from Apple.

Samsung Electronics said Monday it expects to record an operating profit of 8.3 trillion won ($7.8 billion) for the fourth quarter of 2013, an 18 percent drop from the previous quarter's record earnings due to smartphone market saturation and increased competition from Apple.

The guidance, issued ahead of the release of full quarterly financial results later this month, was lower than the 10 trillion won average analysts polled by Bloomberg had expected. The South Korean electronics giant also expects to report fourth-quarter sales of 59 trillion won ($55 billion) for the three-month period ended December 31, compared with the 61.5 trillion won average analyst projection.

"Even taking into account one-off costs, the profit is lower than expected. Samsung has not provided details, but smartphone profit may have fared worse than expected, given increased marketing expenses," said Lee Seung-woo, an analyst at IBK Investment & Securities, according to Reuters.

Samsung's record operating profit of 10.2 trillion won ($9.6 billion) in the third quarter was fueled largely by a rebound in its semiconductor business that offset softening demand in the smartphone market. Profits during the quarter also were buoyed by sales of cheaper handsets in emerging markets such as China, South America, and Eastern Europe.

However, Samsung's mobile division, which routinely accounts for two-thirds of the company's profits, is expected to be hard hit by declining shipments of its flagship smartphone. The company also faces increased competition in the China market due to Apple's deal with wireless giant China Mobile, which plans to begin selling the iPhone 5S and 5C later this month.

Last week, investors concerned over the slowing profit growth in the mobile sector shaved nearly $9 billion off Samsung's market value.

The company will detail divisional earnings for the quarter on January 24.

 

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