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Samsung Electronics’ fourth-quarter earnings in 2015 are expected to remain below par, raising market concerns over its deteriorating businesses.
Announcing its earnings guidance for the October-December period, the Seoul-based electronics firm estimated that its operating income would stand at 6.1 trillion won ($5.1 billion), down 17.46 percent from the previous quarter.
In the third quarter last year, the company raked in, rather surprisingly, 7.3 trillion won in operating profit thanks to the brisk sales of chips and displays, beating market estimates.
Market analysts pointed to the sluggish performances of the company’s smartphone, chip and electronics component units are the main culprits behind the profit drop.
Squeezed by Apple in the high-end smartphone segment and Chinese upstarts, including Xiaomi, in the low-end sector, Samsung is struggling to maintain its crown as the world’s largest smartphone-maker.
The prices of DRAM, a flagship chip product of the Korean firm, hovered at around $3.75 earlier last year but nosedived below $2 in recent months, undermining the profitability of Samsung’s chip business.
“If demand for memory chips does not improve, the slump in the memory sector would persist for a while,” said Song Myung-sup, an analyst from HI Investment and Securities.
As the firm’s fourth-quarter revenue will likely reach 53 trillion won, up 2.55 percent from the preceding quarter, Samsung’s annual revenue in 2014 is expected to exceed the 200 trillion mark, at 200.3 trillion won, for the fourth consecutive year.
However, the firm’s sales record, which reached its peak in 2013 at 228 trillion won, is on the downward path and is expected to drop further down the road, according to analysts.
“Although Samsung’s sales will stand above 200 trillion won last year, the sales figure is on the downward trend for the two years in a row for the first time in the firm’s history,” Lee Seung-woo, an analyst from IBK Securities, adding that it would be difficult for Samsung to achieve its sales goal of 400 trillion won by 2020.
In a bid to revive its tumbling smartphone business, Samsung reportedly plans to roll out its next flagship smartphone Galaxy S7 in February, a month earlier than usual.
By Kim Young-won (wone0102@heraldcorp.com)
