CIO East Africa (Nairobi)

Africa: Samsung Forecasts Operating Profit Drop in Fourth Quarter

Samsung Electronics has given guidance that its operating profit in the fourth quarter of 2013 is likely to be down from the same quarter a year ago, although sales may have grown marginally.

The company issued the guidance ahead of full results later this month. Samsung said Tuesday that it expected operating profit in the fourth quarter to be 8.3 trillion Korean won (US$7.8 billion), down from 8.84 trillion won in the same quarter last year.

Revenue is expected to go up to 59 trillion won from 56.06 trillion won a year earlier, the company said.

The South Korean company shipped 117 million mobile phones in the third quarter for a leading market share of 25.7 percent to Nokia's 13.8 percent share and Apple's 6.7 percent, research firm Gartner reported in November. But there have been concerns that increased competition has put pressure on the company's margins.

Competition from Apple is building up, for example, in China where Apple has signed up the largest mobile carrier, China Mobile, to offer the iPhone, and in Japan where NTT DoCoMo, the largest mobile service provider in the country, also started offering the Apple iPhone in September. Samsung also faces competition from low-cost local players in large mobile phone markets like China and India.

Samsung continues to roll out new products, including a smartwatch and new tablets to stay ahead of competition from Apple and other companies. The company said revenue for the fourth quarter would be in the range of 58 to 60 trillion won, while operating profit would be in the 8.1 to 8.5 trillion won range.

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