Samsung posts first quarterly profit decline in two years
Samsung has posted its first quarterly operating profit decline in two-years, creating concerns about growth ahead of its next-generation flagship launch in the spring.
The company reported operating profit of $7.7 billion during the fourth calendar quarter of 2013, falling 6 per cent from $8.27 billion the year before. It's not a huge drop by any means, but can be seen as concerning for investors as the smartphone market's demand begins to flatten, while Samsung's rivalry with Apple continues to rise.
Samsung blames the weaker than usual operating profit on a $745 million bonus paid to its employees during the quarter, and that the Korean won is rising compared to other currencies, causing foreign-exchange loses.
Operating profit from device sales at Samsung, its bread and butter, was flat in the fourth calendar quarter compared to the year before, but slipped 18 per cent compared to the third quarter. Apple launched its iPhone 5S and iPhone 5C handsets during the time period, which analysts speaking to Bloomberg said could have had an impact on Samsung's flagship Galaxy S4 sales.
Samsung hopes to retain its smartphone lead in the US and China when it launches the Galaxy S5, which is rumoured to be ditching the plastic design. The company is keeping quiet about the specifics of its Galaxy S5 handset, but has confirmed it will launch in March or April along with a Galaxy Gear successor carrying a more sleek design.
"It will be challenging for Samsung to improve its earnings in the first quarter as the weak seasonality of the IT industry will put pressure on demand for components and TV products," the company said in a statement.
Samsung's main-competitor Apple is set to report its Christmas earnings on Monday.