Samsung revealed that its third-quarter operating profit likely fell 58% to 62% from a year earlier, reports the WSJ. That's even worse than the low end expectations of analysts and the fourth quarter in a row with declining operating profit.
Samsung said that smartphone shipments "increased marginally"; however, profit margins declined due to lower prices and higher marketing expenses.
The company is facing increased competition at the high-end from the new Apple iPhone 6 and iPhone 6 Plus which have larger screens, previously a distinguishing feature for its devices. The company is also facing intense competition at the low-end from Chinese handset makers.
Samsung's third quarter included just twelve days of iPhone 6 sales and analysts expect the impact of the new Apple smartphones to be even larger in the fourth quarter.
Nomura analyst C.W. Chung says that without essential differentiators like Apple's design cachet and a software ecosystem, Samsung is headed toward becoming a maker of commoditized hardware. Chung predicts that its operating margins for handsets and tablets will decline to 11% in 2016 from 21% in 2013.
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Comments (8)
Comments are closed for this article.
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Guest - October 8, 2014 at 8:07am
Samsung isn't the only one using Android OS. HTC, Asus, LG, HP, and Sony also use Android, so there is a lot of competition.
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marc767 - October 8, 2014 at 9:20am
Apple and Android have two different models. Android is open source and allows any OEM to use their software. Apple doesn't. Each model has its benefits; iOS is growing while Android is accessible with more options. If you want iOS you must buy Apple, which offers control over hardware, software, and the ecosystem for a specific user experience.
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Mrstudz - October 7, 2014 at 10:08pm
Samsung makes many components including processors, SSDs, RAM, and screens for various devices.
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Guest - October 7, 2014 at 8:08pm
May be Samsung should make a bigger phone and hope ppl will buy it!
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marc767 - October 7, 2014 at 4:40pm
What a pity! I thought their ads would help them. And the apple wAtch hasn't even come out yet. Well they make nice phones, but apples got stuff they can't invent or buy with money. Apple all the way.
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iDood - October 7, 2014 at 4:20pm
Samsung's commercials maybe true but childish and unprofessional. I worked in a customer service and one of the thing that thought me, to never put down or belittle your competitor.
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NoGoodNick - October 7, 2014 at 4:19pm
I'd hardly claim that Samsung's best days are behind them. The main problems, as I see it, is that everyone else is catching up with their most popular phone (their newer phones never did as well), as well as increased competition in China.
While I'm an Apple fanboy, I'd rather see some healthy competition (instead of constant snipping at each other). A strong Samsung makes Apple better. Give them time, they had a misstep with their last phone flagship product, and it'll take them time to get their next model out.
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Techno - October 7, 2014 at 3:46pm
It pretty much says,"We will give it away cheap and put out a lot of commercials to get more business" Didn't work out like they would like it to be.
![Apple's Private 50th Anniversary Exhibit at Apple Park Revealed [Photos]](/images/news/100450/100450/100450-160.jpg "Apple's Private 50th Anniversary Exhibit at Apple Park Revealed [Photos]")
