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AP Photo/Lee Jin-man

Samsung earnings fall as mobile growth slows down

Analysts say that the company’s smartphone business was not as lucrative because of higher marketing costs.

QUARTERLY EARNINGS AT Samsung fell for the first time in two years as sales of smartphones and tablets slowed in developed countries.

The South Korean company estimated an operating profit of 8.3 trillion won (€5.7 billion) for the final three months of 2013, a 6 per cent decline over a year earlier.

The result was lower than forecast by analysts and an 18 per cent drop from the third quarter. Sales rose 5 per cent to 59 trillion won (€41 billion).

Since the last quarter of 2011, Samsung’s operating income has increased every quarter, peaking at 10.2 trillion won (€7 billion) in the July-September period.

The fourth quarter performance shows that explosive growth in Samsung’s lucrative mobile device business has come to a halt.

It will release its net profit result for the fourth quarter later this month.

Analysts said Samsung’s profit fell because its businesses supplying advanced displays and chips for iPhones and Galaxy smartphones posted smaller profit.

They said Samsung’s smartphone business making Galaxy smartphones and Galaxy Gear smartwatches was not as lucrative as before because of higher marketing costs.

“It’s an earnings shock,” said analyst James Song at KDB Daewoo Securities. “The profit at mobile communications business must have been much lower than expected although it’s likely that Samsung gave bigger bonuses to employees.” Song had estimated 9.3 trillion won of operating profit for Samsung.

Samsung Electronics’ smartphone business also faces more competition in China. Starting next week, Apple is scheduled to begin selling iPhones through China Mobile, the world’s largest wireless carrier, a move that could threaten Samsung’s growth in the smartphone market.

Samsung held 21 per cent market share in China’s smartphone market during the third quarter, up from 14 per cent a year earlier, while Apple’s share declined to 6 per cent from 8 per cent, according to research firm Canalys.

Read: LG and Samsung unveil similar 105-inch TVs on the same day >

Read: This Samsung advert is the most hilariously awful thing you’ll see today >

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23 Comments
    Install the app to use these features.
    Mute brendan harlowe
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    Jan 7th 2014, 5:38 PM

    Ouch 5.7 billion only! Bet they will be totes morto at the AGM!

    66
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    Mute Dave Connolly
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    Jan 7th 2014, 5:51 PM

    OMG the shame.

    26
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    Mute James St John Smith
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    Jan 7th 2014, 5:35 PM

    Samsung is better

    51
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    Mute James St John Smith
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    Jan 7th 2014, 5:35 PM

    Apple is better

    46
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    Mute Fergal Reid
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    Jan 7th 2014, 6:10 PM

    Smartphone market is approaching saturation point. It’s only to be expected.

    43
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    Mute JamieKay
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    Jan 7th 2014, 5:27 PM

    Samsung are in trouble.a lot of users experiencing problems since the last system update.

    43
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    Mute Gahan Frost
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    Jan 7th 2014, 5:32 PM

    I wish I have stayed with HTC. S4 camera sucks in low light. My old HTC was doing better. And Samsung interface is terible.

    32
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    Mute Just Chief Now
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    Jan 7th 2014, 5:51 PM

    The second last update you mean? 4.3 is working fine

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    Mute Dermot Fennelly
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    Jan 7th 2014, 5:55 PM

    HTC all the way ,

    17
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    Mute Leslie Alan Rock
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    Jan 7th 2014, 5:57 PM

    Turn your camera to auto. Ive never had any issues with my s4. Cameras cracking

    35
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    Mute Mary Kavanagh
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    Jan 7th 2014, 6:13 PM

    Yeh, multi windows knocked off, the photo gallery sucks and, worst of all, in camera settings the zoom has been disabled. Not happy is an understatement!!!! I thought Samsung were better than Apple for updates. Guess I was wrong.

    15
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    Mute Joe McDermott
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    Jan 7th 2014, 6:23 PM

    Ive never had any issues after the last update.

    14
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    Mute sean t bugger
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    Jan 7th 2014, 6:51 PM

    In trouble me arse. Their phones have been out a while. It to be expected with old tech. Come summer a new flagship model comes out sales go up profits go up. It’s like saying sales of playstations threes are down lol.

    Non story

    11
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    Mute Bartrude
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    Jan 7th 2014, 7:24 PM

    Galaxy Grand. 6″ screen. Go Samsung.
    :D

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    Mute Mary Kavanagh
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    Jan 7th 2014, 7:38 PM

    How do you turn it to auto, Leslie? Thanks. I think I need a “SGN2 For Dummies” book! :)

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    Mute Mary Kavanagh
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    Jan 7th 2014, 7:41 PM

    I got an update on Samsung Galaxy Note 2 about two days ago and it made a mess of some of the apps and programmes. Still a cracking phone though.

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    Mute Marcus Kiely
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    Jan 7th 2014, 6:23 PM

    Samsung Kies is total rubbish

    32
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    Mute John Ruane
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    Jan 7th 2014, 6:02 PM

    The HTC one is amazing. I used to have the s4, it was laggy at times and the build quality was driving me nuts. Htc one build quality is on par with Apple, first android phone to be able to boast this feat.

    30
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    Mute My Views
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    Jan 7th 2014, 6:18 PM

    I presume you’re talking about materials and fit-and-finish when you talk about build quality? The build quality doesn’t make a difference to the function of the phone unless of course it interferes with reception in the case of one of the iphones.

    How was the build quality driving you nuts?

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    Mute John Ruane
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    Jan 7th 2014, 6:59 PM

    The s4 was impractical. It was difficult to grip. The HTC one has a more ergonomic design and fits better in the hand. When I pay good money for something I expect everything to work perfectly with a high quality build. Although the s4 polycarbonate backing that creaks in your hand isn’t really the end of the world as you believe, I would prefer something that’s built better as I am paying half a grand for the device!

    20
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    Mute Darren
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    Jan 7th 2014, 6:43 PM

    Samsung phones are quality. If you could access your iTunes from it that would be deadly. The nexus 5 is a quality phone also.

    22
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    Mute sean t bugger
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    Jan 7th 2014, 6:53 PM

    ITunes ewwww kill it kill it with fire.

    29
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    Mute Kieran Casey
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    Jan 8th 2014, 12:06 PM

    Them big stupid looking phones its like been in the cinema when someone answers them in a bus at night…..

    1
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