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SAMSUNG POSTED ITS first drop in annual net profit in three years Thursday and saw resurgent arch-rival Apple barge in on its pole position as the world’s top smartphone maker.
The South Korean firm, whose key mobile phone operations have struggled in the face of intense competition from cut-price Chinese rivals, also warned that it expected 2015′s “business environment… to be as challenging as 2014.”
The tech giant said Thursday it recorded a net profit of 23.4 trillion won (€18.95 billion) in 2014, down 23.2% from a year ago and the first decline since 2011.
Operating profit fell 11.7% to 25 trillion won (€20.1 billion) in the year and sales also tumbled 10% to 206 trillion won.
Under growing pressure to boost shareholder returns, the company still managed to announce an increased dividend of 19,500 won a share, up from 13,800 won a year earlier.
The Samsung results contrasted sharply with the triumphant surge in the fortunes of California tech titan Apple, which reported a fourth quarter net profit of €15.9 billion – the largest ever made by a public company.
Apple’s performance was driven by the sale of 74.5 million iPhones, which included a doubling of sales volume in the crucial Greater China region.
Samsung’s fourth quarter net profit, meanwhile, was down 27% at 5.3 trillion won (€4.2 billion).
Chip cushion
The fall was cushioned by a boom in high-margin chip sales that helped offset the downturn in the key mobile sector, with operating profit in the semi-conductor division rising 35.7% to 2.7 trillion won (€2.1 billion) in the October-December period from a year earlier.
Samsung shares closed the day down 1.31% at 1,360,000 won (€1,096).
The annual profit figure marked a dramatic reversal for the company, which is also facing a once-in-a-generation leadership change after several years of stellar growth, driven by the once all-conquering mobile division.
The popularity of the iPhone 6 helped Apple catch up with Samsung to share the title of world’s top smartphone vendor, market researcher Strategy Analytics said Thursday.
Apple shipped 74.5 million handsets in the fourth quarter of last year with a market share of 19.6% – on a par with Samsung, whose shipments and market share slipped markedly from a year ago.
Samsung had held the global smartphone vendor crown on its own since dethroning Apple in 2011.
Samsung’s flagship Galaxy phones have suffered in the high-end market thanks to the popularity of the iPhone 6, while its dominance of the middle- and low-end handset segment has been challenged by Chinese firms such as Huawei, Xiaomi and Lenovo.
New strategy
Samsung plans to slash the number of smartphone models it issues in 2015, while boosting production of remaining models that can be sold more cheaply to compete with Chinese rivals.
Streamlining the product mix should increase sales in the current quarter, Samsung’s head of investor relations Robert Yi predicted, while nevertheless warning of a tough year ahead.
“When we look at 2015 as a whole, we fully expect the business environment… to be as challenging as 2014,” Yi said.
Handset sales will be driven by growth in emerging markets including China and India, said Park Jin-Young, vice president of Samsung’s mobile unit.
Sales of tablet computers are expected to grow, largely boosted by sales of mid-priced and low-end products, Park said.
A more fundamental restructuring is assumed to be in the pipeline, with control of the family-run conglomerate’s main business expected to pass from ailing patriarch Lee Kun-Hee to only son Lee Jae-Yong.
Needing cash to pay for what will be a massive inheritance tax bill, Lee and his siblings are expected to pare down and simplify the byzantine system of cross-holdings that link the many branches of the Samsung empire.
The anticipated reforms have helped keep Samsung on the “buy” list of many analysts, despite the recent profit downturn.
Thursday’s dividend increase will help appease disgruntled shareholders who watched Samsung’s stock price take a battering last year.
The company is currently in the middle of a €1.76 billion share buyback process announced in November.
With a market capitalisation of about $185 billion, Samsung accounts for nearly 17% of the weighting on South Korea’s benchmark Kospi composite index.
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Persecution complex. No interest in the royal family but they’re well rid of him.
@Paul Shepherd: Diana would be proud of him.
He has totally lost the plot.
Their going a odd way of staying out of the limelight
@Gerry k: They never said they want out of the limelight completely. There’s a difference between living in a fishbowl and being hounded by the UK gutter press with your every breath scrutinised and having your own output into the world. Being in that RF would mess anyone up, they’re right to get out. Can’t behave and interact like normal human beings
@Megan Finnegan Ward: Their own input is a reality show on the soon to be doomed Netflix. Thats some contribution.
@Pauline Gallagher: Whether it’s great or a load of shite is irrelevant to the point that there is a difference between being hounded by the press and having the Daily Mail post crap about you every day and having a voice where you actually get to give your own opinions. Don’t have to like either of them to understand the difference and that they never said they wanted to go live in a cave and never be seen or heard again. Mind, anyone who gets away from that family is doing something right imo, poisonous
“dirty game ” How many people would put up with that for $100 million Netflix paycheck . How can they stretch an 8 part out of constant moaning and whining . No more please
Zunts
I believe they were right to get out. I can only imagine the awful family feuds and nasty manipulation that goes on. There’s too much money and a very high profile institution to protect. Harry is his own man unlike his father, brother and uncles. Good luck to him.
@2thFairy: he’s not a man, he’s a wimp. He is on the royal paycheck still, he has never had a proper job, just spends his days thinking up ways of attacking his family. He is the eternal victim and actually believes his own hype, even though its completely out of proportion now. He doesn’t seem to understand how privileged he is. He lost his mother,but some kids have lost both parents even younger, are homeless, have no education, no happy childhood. They have both made this into something it is not. They have each other, 2 beautiful kids, mansions to live in, more money than they will ever need but they’re still seeking out the limelight with this battle. NOBODY CARES ANYMORE.
I never even knew Megan was mixed race until they mentioned it all the time, I just thought she was a beautiful woman. I don’t know. They deserve each other.
I’d rather watch paint dry. I can’t understand the facination about the royal family. Completely and utter stupidly.
@Joe Lynch: You don’t have to watch it.
You still somehow felt compelled to read this article and comment on it. But yeah sure, you certainly won’t watch the documentary that threatens to embarrass the Royal Family that you’d love to see embarrassed.
@Conor King: Prince Andrew has already embarrassed the royal family,way more than a Netflix documentary ever will Conor. Iam with joe on this one.
@Conor King: oh boo hoo.
People are entitled to express opinions mate – including ones that are different to yours and about things they don’t like.
Life isn’t all marshmallows, unicorns and rainbows.
@UK Hurling Bloke: You know someone pointing out that it’s funny when people go out of their way to read and comment on articles about things they declare they have no interest on (because we’d all be exhausted if we did that on everything we saw and have no interest on) isn’t ‘not liking other opinions’ and wanting life to be all happy clappy yeah?
@Conor King: Conor I am with Joe. I do not have to watch it and I will not watch it. That institution is a disgrace and so is the British establishment. All parties deserve each other
@Michael J Foley: Cool story Michael. I can tell you have no interest in the Royal Family because you clicked on this article and read it right down to the comment section.
I’m so sick of hearing about those two. It’s like they’re the only thing on the planet to talk about. I can’t imagine why anyone even cares at this stage
Himself and the missus could have just gone to ground and live the quiet life. They are probably more of a pap magnet now then ever.
Reading a description of a one minute visual trailer is a fascinating experience. I’m so glad I did it.
Who really give a s—- about them. There are wars, people homeless, people losing jobs. Spoilt overpaid publicity seeking unimportant insignificant people.
As.someone said ‘ there’s 3 truths to every story ,your truth ,my truth and the real truth ‘. But the situation where you have an heir and a.spare is the root of Harry’s intense misery I believe .He follows on from his grand aunt Margaret who seems to have been equally embittered by her 2nd.fiddle position in the family . Why they can’t create a proper role for the 2nd in line I just don’t know .
Will the family take him back when she divorces him in a year or so ????
There’ll be some craic above in heaven watching that
Everything I know about this couple, I learned against my will.
Tell someone who gives a sh!t!!!!!
The ‘dirty game’ must be the nickname he uses for the wife…
Easy to see who reads UK gutter press here.
have your say