Samsung Electronics on Thursday said its quarterly earnings dropped smaller-than-expected 27 per cent in the fourth quarter but its forecast-beating profit could not mask that it was losing the battle of the big phones with Apple.
The company beat forecasts not because of a fundamental improvement in its mobile phone business, but mainly thanks to solid performance of component businesses, such as memory chips and display panels.
Samsung said its sales of the Galaxy Note 4, its flagship big-size smartphone measuring 5.7 inches diagonally, increased from the third quarter. Its overall smartphone sales during the quarter were between 72.2 million units and 75.1 million units, confirming analysts’ forecast that Apple, at its record-high 74.5 million sales of iPhones during the same quarter, has narrowed its smartphones shipments gap with Samsung.
Samsung, the world’s top smartphone maker, said that its October-December earnings were 5.3 trillion, compared with 7.3 trillion a year earlier.
Samsung’s quarterly net income has dropped over a year earlier for four straight quarters. But the bottom line was a moderate recovery from the previous quarter’s 4.2 trillion won and higher than analysts’ forecasts of 4.4 trillion won, according to financial data provider FactSet.
Sales fell 11 per cent to 52.7 trillion won from a year earlier while operating profit slumped 36 per cent to 5.3 trillion won, in line with Samsung’s preview earlier this month.
The Korean company’s mobile business began to struggle in 2014, while Apple enjoyed record-high sales of the bigger iPhones that it released in September, which drove the stellar earnings that it reported on Tuesday.
Samsung’s IT and Mobile division that makes Galaxy phones recorded operating profit of 1.96 trillion won in the October—December quarter, less than half of the 5.47 trillion won operating profit in the same quarter of 2013. But that was still better than the July-September period’s 1.75 trillion won operating income.
The recovery from the previous quarter showed that the dramatic decline in its smartphone business may have stopped. The company said its mobile phone business’s performance improved from the three months earlier because the Galaxy Note 4 and other high-end smartphones saw higher sales that offset a drop in sales of cheaper phones.
Facing a dramatic fall in smartphone sales, Samsung vowed last year to reduce the number of smartphone models to streamline businesses and to adopt a change in design by using metal in more high-end models.
Samsung has introduced the Galaxy Note Edge, the big-size smartphone with a curved side display, but it remained a niche product rather than a mainstream model. Samsung is expected to unveil an update to its flagship Galaxy S model.
