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Samsung expects first profit decline in more than two years

Posted: , by Luis D.

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Samsung expects first profit decline in more than two years
Samsung's estimates for the last quarter of 2013, ahead of its upcoming full earnings report, show that even the strongest animal in the jungle must battle to survive. According to the data, Sammy's operating profit has declined for the first time in more than two years, having fallen between 3.8% to 8.4% from Q4 2012. This will result in an operating profit of $7.6 billion to $8 billion on sales of $54.5 billion to $56.4 billion for the fourth quarter of 2013.

Although Samsung sales and earns in a quarter more than some of its top-competitors make in total revenue, apparently this is not enough to please analysts and shareholders. On average, analysts expected Samsung to deliver $8.31 billion operating profit on sales of $56.8 billion. Samsung's own expectation are a little below theirs, and although the company's estimate seems like a slight dip in in its financial well-being, Samsung's investors remain concerned as its market value recently dropped as much as $8 billion.

The most likely culprit is a slowdown of smartphone sales in what is becoming an increasingly saturated and aggressive market. Mobile devices are very important for the company, as they have accounted for more than half of its profits over the past two years. Another significant factor is the strengthening of the Korean won against the US dollar, which makes Samsung's products more costly to produce. Third, Sammy's marketing spending reaches new galactic proportions each year, with 2013's marketing and advertising budget coming in higher than Iceland's GDP. Finally, unusually high bonus payments for Samsung employees may have contributed to the situation, too.

Although Samsung's spearheaded train might be slowing down from the analysts' perspective, it won't be stopped anytime soon. At CES 2014, only hours ago, the company revealed four new high-performance tablets and a next-generation Smart Home platform, and is set to continue introducing many more new devices across the year. However, Samsung needs to kick back and rethink its plans, as its strategy of dominating the market by sheer product and marketing force has began to backfire.

source: Wall Street Journal, more via Engadget

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21 Comments
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posted on 07 Jan 2014, 03:41 1

1. Aplusk (Posts: 98; Member since: 10 Nov 2013)


there are so many brand coming with so many stuffs with android on it.

posted on 07 Jan 2014, 10:38

17. alpinejason (Posts: 262; Member since: 06 Sep 2011)


learn how to speak proper english aplusk

posted on 07 Jan 2014, 14:03 2

21. Ashoaib (Posts: 1924; Member since: 15 Nov 2013)


Hey, plz dont give english lessons to people... not everyone born with english as a first language or not everyone has an access to high quality schooling... and the most important thing is to get your msg across, which he did...

posted on 07 Jan 2014, 13:57

20. Ashoaib (Posts: 1924; Member since: 15 Nov 2013)


Bcoz chinese manufacturers are coming with latest tech and more faster than big oems and their phone offers more value for money than big names... I owned chinese phone and thats not bad in comparison to the price I purchased it... but MT processor is legendary slow... I am waiting for xplay 3s to arrive in the market

posted on 07 Jan 2014, 03:44 1

2. Loubielou (Posts: 208; Member since: 11 Jul 2012)


|Samsung have really got to Upgrade the Quality of the Smartphones to be more succesful,they release there phones early an the boom starts,an people with old versions of the iPhones look for a Alternative phone,Until the New iPhone is Released then Samsung Struggle again,its going to be like this in 2014 unless Samsung make the Galaxy S5 a Outstanding phone,an when Apple release the iPhone 6 they will be the same story again,so hope the Galaxy S5 really shows to People that Samsung are really going to change there Stratedgy an make more Top Quality Smartphones

posted on 07 Jan 2014, 04:19 7

3. SleepingOz (unregistered)


Cheap aluminium isn't really considered as "Top Quality" you know. It does feel good in hands but has more disadvantages then actual advantages. iPhones never "Top Quality".
The reason why it's like this, is because Apple's still a solid fanbase(which is declining btw), and iproducts are still considered as status symbols by brainless.

posted on 07 Jan 2014, 05:06 6

6. giani (Posts: 269; Member since: 13 Nov 2012)


Ammmmm the same can be said about 'sammy' fans...in terms of brainless. However you are right and apples is a status unfortunately... same as big luxurious clothing brands u know ?! But here is where u have to give credit to them...the power of marketing.. I have a htc one and it's pure class but people still bought samsungs...so what I'm trying to say is grow a brain and bring valid arguments... don't just accuse a bad corporation for doing the same things the other 'saint' corporation does.
P.s. the only thing samsung innovated lately was to find posh names for plastic aka faux leather and polycarbonate. But that's because they are better than premium materials right ?!!! Not because they are cheaper and easy to make...hence more profits...the power of marketing..

posted on 07 Jan 2014, 07:25 1

11. poikilo (Posts: 47; Member since: 07 Jun 2012)


Polyxarbonate is the scientific name for plastic, not some name samsung came up with.
If you want to bash a company, at least do your homework.

Plastic is used because it has better properties than metals. You can make a plastic suiting your needs, with metals you have to live with the intrinsic properties.

posted on 07 Jan 2014, 07:57

13. xfire99 (Posts: 492; Member since: 14 Mar 2012)


If you want to pick on someone, then choose another phone to compare with and HTC One isnt the one. HTC devices have too many issues and not about marketing.
http://www.digitaltrends.com/mobile/htc-one-problems/

posted on 07 Jan 2014, 11:19

19. SleepingOz (unregistered)


Dude, seriously you're the one who should grow a brain. You're a freaking biased hater. Polycarbonate is more suitable for phones than aluminium will ever be. It is light yet strong, deals shock better since it is flexible, doesn't take dent or scratch easily(even if the paint does), doesn't conduct heat and electricity and it doesn't interfere with signals. The only advantage aluminium has over polycarbonate is that aluminium feels "premium" in hands(when it's not burning hot of course). Then again, build quality is another story since the HTC One has one of the worst build quality in the modern smartphone era.

posted on 07 Jan 2014, 04:38 2

4. MrJerry (Posts: 393; Member since: 05 Oct 2012)


Come on. They are totally fine lol
They paid their employees more than 800 millions of bonuses for their anniversary.
That amount of money is much more than the rest android OEMs make per year.
Plus the other reasons...they just happened at the same time

posted on 07 Jan 2014, 05:02 1

5. ianbbaa (Posts: 196; Member since: 20 Mar 2013)


I guess its not in Samsung itself - i believe also other companies will face the same future. Market is crowded already, devices are top specced and do not need to go higher in order to make consumer "more" happy when S4, N3 and others devices offers already a top notch experience in PHONE usage - and main bottleneck is OS itself (Android, iOS, WP8).
I wont upgrade S4 to S5 because of 64bit CPU, 2K screen etc...i will keep it as long as it will live - S5 will be still a PHONE - so will be iPhone 6 or LUMIA 9xx/10xx in the future - JUST a PHONE.
Regarding tablets, the same - if iPad or Android tablet - the cheaper chinese CPUs, less tablets sold from known brands. Android, iOS tablets are still toys and can not be considered for serious work - what for then i need super duper expensive tablet with toy OS? In this part all producers lack behind although NOTE series is great and personally use Note 8. But i still need Win desktop and programs - where are such tablets?
TVs - also tired from year to year new standards and higher and higher "definition" - but content lacks so who need to change a TV every 2-3 years when there is less content then TV cant handle to its full potential? I also do not need a SMART TV which for me personally is uselles for webbrowsing skype etc...
Home apliances the same - until they work they work - some people are not going to trash washing machines and fridges because S5 will be able handle my houshold. - I still must put washes into machine - so i can also push the button.

There are consumers that will buy, but i think most people are tired of spending so much money last years when technology - phones, tablets evolved much. But its over and is time to stagnate.

There is nothing wrong with build quality or something else with SAMSUNG phones - i like their software base if S4 or NOTE things - but some of us are still depending on proper desktop OS.

So i am fine for next 2 years with S4 Phone, Note 8, and a PC that handles 95% of my work even via my NOTE 8 connected to RDP session. I wait for small 8" W8 tablet - dockable to external screen, 3G. wacom digitizer...but there is no to date. Note8 is great, but i d like to change its OS as Android is....

posted on 07 Jan 2014, 05:49 3

8. androiphone20 (Posts: 1422; Member since: 10 Jul 2013)


Sammy really did some heavy spending on marketing, literally everywhere that you turned to was a Samsung commercial. This is by no means a bad thing but considering that Apple only spent a billion on marketing (The rest was done by the people in films, tv shows...), It really felt like Sammy was trying too hard

posted on 07 Jan 2014, 09:27 1

15. joey_sfb (Posts: 2892; Member since: 29 Mar 2012)


Your trying too hard is actually feeding back into the economy for the rest of the world. Apple is committing a sin of greed by hogging on to the world money.

posted on 07 Jan 2014, 09:30

16. androiphone20 (Posts: 1422; Member since: 10 Jul 2013)


I see

posted on 07 Jan 2014, 06:18 2

9. flipjzn (Posts: 143; Member since: 22 Jun 2012)


Well, there are a hundred android phones coming out every day what do yah expect.
Wait, that doesn't.t even include the other hundred samsung phones released every day.
So yah, good luck!

posted on 07 Jan 2014, 06:40 2

10. twens (Posts: 610; Member since: 25 Feb 2012)


So since when did advertising become a bad thing. In the android world there are thousands of different android phones. If you want to make yours different you have to advertise the hell out of it. Are people actually comparing Samsung's tactics to Apples? IPhone was marketed very well in its early stages when android wasn't even android. Apple is the only company offering an iOS phone. So yes they don't need much marketing like sammy does. Do you people think apple is making profits like they used to? The answer is no, and that's also because of strong competition from all android OEMS. Sammy has done a great job to be even recognized in this mobile industry when apple was what everyone knew back then. Now sammy is an equally strong brand. The media makes it look like IOS is more advanced than android and also brainwash people to think Samsung's choice of material is inferior. Meanwhile the truth of the matters is Iphones get more scratches and dents over a period of time than the plastic sammy phones. People need to wake up and choose for their selves. Don't let some one tell you what is best.

posted on 07 Jan 2014, 07:37

12. androiphone20 (Posts: 1422; Member since: 10 Jul 2013)


Sometimes it was just too much to handlehttp://www.latimes.com/business/technology/la-fi-tn-is-samsungs-galaxy-gear-worst-ad-2013-20131223,0,613242.story

posted on 07 Jan 2014, 08:15 5

14. bubbadoes (Posts: 326; Member since: 03 May 2012)


Samsung has flooded the market with a bunch of over spec'd junk. Galaxy's, Notes, Tabs, Mega's--seems like every article is a release of another product!

posted on 07 Jan 2014, 10:42 2

18. alpinejason (Posts: 262; Member since: 06 Sep 2011)


i agree 100% with bubbadoes

posted on 07 Jan 2014, 21:00

22. poikilo (Posts: 47; Member since: 07 Jun 2012)


Gotta agree with you on that one. But the thing is, other than the mega line, all of them have been super hits.
First the S series, then note. Then came the tab lineup when android didnt have much of a tablet choice. Then note tablets, grand series and mini series, both of which have had a considerable share of emerging markets, that too with such success that iterations have been released. Cant blame them for that.

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