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Sluggish demand for premium smartphones during the holiday shopping season appears to be weighing on Samsung’s bottom line.
The South Korean electronics giant said Thursday it expects to record a fourth-quarter operating profit of 6.1 trillion won ($5.1 billion). While that’s up 15 percent from the year-ago period, it falls short of analysts’ average estimates of 6.6 billion won, according to polls taken by Bloomberg and Reuters.
Revenue for the quarter likely will come in at 53 trillion won, in line with analysts’ average estimates of 53.8 trillion won. The guidance, released today ahead of full earnings later this month, did not provide specific divisional results.
The last two years have been rough on Samsung, the world’s largest maker of smartphones. In October, the company snapped a streak of seven consecutive quarterly profit declines but warned that profits would fall in the fourth quarter.
Samsung, which doesn’t release smartphone shipment numbers, said it saw a “significant increase” in smartphone shipments in the third quarter but that revenue was hurt by price cuts for its Galaxy S6 and S6 Edge and shipments of low- to midrange smartphones. Samsung had pinned its turnaround hopes on the new flagship handsets, which feature metal casings instead of Samsung’s normal plastic.
Samsung remains the smartphone king, but it has been hit hard by saturation in the high-end market and intensifying pressure on the low end. Samsung long counted on its marketing and hardware prowess to attract customers seeking an alternative to Apple’s iPhone.
The company is also battling competition from low-cost phone vendors such as Xiaomi and India’s Micromax, which offer cheap devices with high-end specs in their local markets. Meanwhile, Apple is grabbing more of the high end of the market, as well as angling for customers who want the big-screen phones Samsung had used to differentiate itself. Last year, Apple introduced the 4.7-inch iPhone 6 and 5.5-inch 6 Plus, which it recently updated.
Samsung’s Galaxy S7, its next flagship smartphone, was rumored to get a January announcement to give it a leg up on the competition by getting it into consumers’ hands earlier. Now it’s looking like the S7 will make its debut in late February before the Mobile World Congress.
