Samsung whiffs on earnings thanks to iPhone and Asian rivals
Samsung announced earnings on Thursday well below analyst expectations, prompting speculation that Apple's iOS device lineup, along with increased competition from smaller Asian manufacturers, are slowing the Korean tech giant's growth.
As reported by Bloomberg, Samsung's fourth quarter earnings fell short of analyst estimates as the company's hold of the high-end smartphone market eroded with the launch of Apple's iPhone 5s.
Samsung reported net income of 7.22 trillion won, or about $6.7 billion for the three months ending in December. According to the publication's compilation of estimates from 11 analysts, the company was expected to bring in an average of 8.2 trillion won, or $7.6 billion.
Operating income came in at 8.3 trillion won, which represents the firm's first quarter-over-quarter decline since 2011.
The smartphone giant is apparently seeing competition from both sides of the market, analysts said. Apple continues to dominate the high-end with its iPhone lineup, while a burgeoning low end is quickly being saturated by upstart device makers like Lenovo and Huawei. A large portion of Samsung's handset volume is weighted toward the the mid- to low-tier segment, helping the company keep the title of world's largest handset maker.
Adding to the firm's woes is a strengthening South Korean won -- up 2.4 percent against the dollar this past quarter -- which dampened the value of Samsung's income.
"Samsung's two major challenges for 2014 are to maintain its mobile-phone leadership in China and the U.S., while simultaneously growing its tablet business quickly enough to knock Apple iPad from its perch," said Neil Mawston of Strategy Analytics.
Daewoo Securities estimated the Galaxy S4 shipments of 9 million units during the fourth quarter, a number much lower than its December estimate of 13 million units. This compares to 17 million units sold in the third quarter, Daewoo said. By contrast, Apple sold 33.8 million iPhones over the three months ending in October.
As for future products, Samsung is looking to release its next-generation Galaxy S5 in April, which will be paired with a follow-up to the Galaxy Gear smartwatch. Samsung's executive vice president of mobile Lee Young Hee offered the roadmap earlier in January, but failed to elaborate on the company's wearable device plans.
With a so-called "iWatch" expected from Cupertino later this year, Samsung is looking to make inroads in the wearables segment before Apple fields an entry. Initial demand for the first-generation Galaxy Gear was moderate at best, with announced shipments -- not sales -- of 800,000 units over the product's first two months on the market.
Over the past quarter, the Korean firm pushed out a number of smartphone, "phablet" and tablet devices in a variety of screen sizes, while Apple kept its mobile product lineup revisions fairly uniform. Only the iPad Air saw a significant overhaul in terms of chassis size, but even that device carried over the same 9.7-inch display size from last year's model. Comparatively, it seems as though Samsung is aggressively trying to fill every niche it can.
Apple is also rumored to be jumping on the big-screened-device bandwagon, however. A report from The Wall Street Journal on Thursday cited inside sources as saying larger handsets are on tap for 2014, including a 4.5-inch version and a jumbo model with a screen size above 5 inches.
Apple is slated to report its earnings for the quarter ending in December on Jan. 27, at which time iPhone and iPad sales numbers will be revealed.
As reported by Bloomberg, Samsung's fourth quarter earnings fell short of analyst estimates as the company's hold of the high-end smartphone market eroded with the launch of Apple's iPhone 5s.
Samsung reported net income of 7.22 trillion won, or about $6.7 billion for the three months ending in December. According to the publication's compilation of estimates from 11 analysts, the company was expected to bring in an average of 8.2 trillion won, or $7.6 billion.
Operating income came in at 8.3 trillion won, which represents the firm's first quarter-over-quarter decline since 2011.
The smartphone giant is apparently seeing competition from both sides of the market, analysts said. Apple continues to dominate the high-end with its iPhone lineup, while a burgeoning low end is quickly being saturated by upstart device makers like Lenovo and Huawei. A large portion of Samsung's handset volume is weighted toward the the mid- to low-tier segment, helping the company keep the title of world's largest handset maker.
Adding to the firm's woes is a strengthening South Korean won -- up 2.4 percent against the dollar this past quarter -- which dampened the value of Samsung's income.
"Samsung's two major challenges for 2014 are to maintain its mobile-phone leadership in China and the U.S., while simultaneously growing its tablet business quickly enough to knock Apple iPad from its perch," said Neil Mawston of Strategy Analytics.
Daewoo Securities estimated the Galaxy S4 shipments of 9 million units during the fourth quarter, a number much lower than its December estimate of 13 million units. This compares to 17 million units sold in the third quarter, Daewoo said. By contrast, Apple sold 33.8 million iPhones over the three months ending in October.
As for future products, Samsung is looking to release its next-generation Galaxy S5 in April, which will be paired with a follow-up to the Galaxy Gear smartwatch. Samsung's executive vice president of mobile Lee Young Hee offered the roadmap earlier in January, but failed to elaborate on the company's wearable device plans.
With a so-called "iWatch" expected from Cupertino later this year, Samsung is looking to make inroads in the wearables segment before Apple fields an entry. Initial demand for the first-generation Galaxy Gear was moderate at best, with announced shipments -- not sales -- of 800,000 units over the product's first two months on the market.
Over the past quarter, the Korean firm pushed out a number of smartphone, "phablet" and tablet devices in a variety of screen sizes, while Apple kept its mobile product lineup revisions fairly uniform. Only the iPad Air saw a significant overhaul in terms of chassis size, but even that device carried over the same 9.7-inch display size from last year's model. Comparatively, it seems as though Samsung is aggressively trying to fill every niche it can.
Apple is also rumored to be jumping on the big-screened-device bandwagon, however. A report from The Wall Street Journal on Thursday cited inside sources as saying larger handsets are on tap for 2014, including a 4.5-inch version and a jumbo model with a screen size above 5 inches.
Apple is slated to report its earnings for the quarter ending in December on Jan. 27, at which time iPhone and iPad sales numbers will be revealed.
Comments
Samsung is doomed. The first QoQ decline after 7 consecutive record quarterly profit. With only $6.7B in profit last quarter, they would surely have to shut down their shop immediately!
Expect an obituary from our famed spinmeister, Dan Dilger -- LOL!!
Nobody who really knows about technology buys iphones only clueless joe's uneducated simpletons in technology buy iphones.
This can't be blamed on competition because revenue is actually up slightly from Q3 2013 and up significantly from Q4 2012. Revenues are perfectly correlated with sales, so sales couldn't have declined unless per-device margins increased.
This drop in profits is due to increased expenses.
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This article is a total farce and sad conclusion to reality. Samsung is the leading android manufacturer with the highest market on the android platform over three years now.
Nobody who really knows about technology buys iphones only clueless joe's uneducated simpletons in technology buy iphones.
It's just a matter of preference. I have a CS degree and have been with Apple since the 3GS. I love my iphone.
Samsung reported net income of 7.22 trillion won, or about $6.7 billion for the three months ending in December.
That's not right.
They sold 7.22 trillion Android devices.
This can't be blamed on competition because revenue is actually up slightly from Q3 2013 and up significantly from Q4 2012. Revenues are perfectly correlated with sales, so sales couldn't have declined unless per-device margins increased.
This drop in profits is due to increased expenses.
It probably has a lot do to with the fact that the S5 is coming out soon -- Apple sales often peaks in 4Q (or 1Q for Apple); then steadily declines until the next iPhone release. Samsung's profit is likely to surpass Apple's in 2Q and 3Q this year.
I think it's pointless to sponsor every single major world sports events (eg, the summer / winter Olympics), or buy celebrity endorsement -- though not all of them are bad (eg, Jay-Z bad, LeBron James cool). Now, I don't think all of Samsung's 2013 marketing budget $13B went into advertising and celebrity endorsements, I heard a large chunk of their marketing expenses pay for rebates, etc, etc.. Anybody know the exact break down?
This article is a total farce and sad conclusion to reality. Samsung is the leading android manufacturer with the highest market on the android platform over three years now.
Nobody who really knows about technology buys iphones only clueless joe's uneducated simpletons in technology buy iphones.
That was the funniest thing I have read all day. Thanks!
Is this Galaxy Gear? Where did this picture come from? It definitely isn't a shipped product. All the screw-heads are properly aligned.
/s
I can't wait to see what miracle Samsung is going to create with the Galaxy S5 in order to achieve high sales. The S4 was probably the most feature-laden Android smartphone available last year and if that didn't sell as well as expected it was because consumers didn't need that complex a smartphone and many consumers actually settled for the giveaway Galaxy SIII which was more than satisfactory. Once Apple starts selling a large display iPhone that will be one less advantage the Galaxy S will have over the iPhone.
I'm systems architect for 15+ years, serial tech entrepreneur (three successful businesses) and have successful apps on the app store. After years of fiddling with Windows admin and development, I saw the light... Apple makes damn good products on rock solid platforms. Unix + Objective-C. It's so elegant and efficient.
So stop you're stupid stereotyping.
But then again, you are probably paid to troubleshoot and install anti-virus software on Windows machines all day so switching to Mac would threaten your job security. So quaint.
It probably has a lot do to with the fact that the S5 is coming out soon -- Apple sales often peaks in 4Q (or 1Q for Apple); then steadily declines until the next iPhone release. Samsung's profit is likely to surpass Apple's in 2Q and 3Q this year.
I think it's pointless to sponsor every single major world sports events (eg, the summer / winter Olympics), or buy celebrity endorsement -- though not all of them are bad (eg, Jay-Z bad, LeBron James cool). Now, I don't think all of Samsung's 2013 marketing budget $13B went into advertising and celebrity endorsements, I heard a large chunk of their marketing expenses pay for rebates, etc, etc.. Anybody know the exact break down?
Again, this isn't due to lower revenues and therefore isn't due to lower sales. It is due to an increase in expenses.
Again, this isn't due to lower revenues and therefore isn't due to lower sales. It is due to an increase in expenses.
Ah, I see. Bloomberg also reports:
"Daewoo Securities estimated the Galaxy S4 shipments of 9 million units during the fourth quarter, a number much lower than its December estimate of 13 million units. This compares to 17 million units sold in the third quarter, Daewoo said. "
Nobody who really knows about technology buys iphones only clueless joe's uneducated simpletons in technology buy iphones.
Ha hahahah! So in other words, you mean "everybody" buys iPhones.