Samsung profit up 15 percent, but disappoints

The company expects operating profit grew 15 percent year-on-year in Q4

Samsung Electronics said Friday that its operating profit in the fourth quarter of last year was likely to be 6.1 trillion won (US$5 billion), up by 15 percent from the same quarter a year ago.

The guidance is, however, lower than analysts' estimates, and far lower than the around 80 percent growth in operating profit the company reported in the third quarter, indicating that slowing growth in China and mature smartphone markets may have affected the South Korean maker.

The bulk of volume and growth in the smartphone market will come from low to mid-range handsets, particularly in emerging markets, IDC said in October. Samsung has introduced a number of low-cost phones but it is up against low-cost Chinese players and local players in fast-growing markets like India.

Samsung does not break up the performance of its various divisions or provide net profit information until its release of audited results later this month.

The company said its sales were likely to be 53 trillion won in the quarter, up from 52.7 trillion won in the same quarter last year.

The company said, when announcing its third quarter results, that it expected higher market demand for mobile phones and tablets toward the end of the year, but competition would get stronger.  It forecast that by 2016, the growth rate for the smartphone market was expected to "slow down continuously, compared with previous years."

Besides smartphones, Samsung makes a variety of other electronic devices like TVs and components like memories and displays. It is also a key component supplier to the smartphone industry. At CES this week, the company made a strong pitch for the Internet of Things market, indicating that the company is looking at many more opportunities beyond smartphones. The company's IT and mobile communications division, however, accounted for more than half of sales in the third quarter.

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John Ribeiro

IDG News Service
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