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Samsung expecting 18 percent drop in operating profit to $7.8 billion

updated 11:40 pm EST, Mon January 6, 2014

Smallest growth in smartphone sales since 2007 cited

In an early Tuesday announcement, Samsung Electronics has reported that it is estimating its October through December operating profit to fall 18 percent to 8.3 trillion won ($7.8 billion), grossly missing analysts' estimates. The company also notes that it is preparing for its smallest growth in smartphone profit since it started manufacturing the devices.

IBK Investment & Securities Lee Seung-woo stated that "even taking into account one-off costs, the profit is lower than expected. Samsung has not provided details, but smartphone profit may have fared worse than expected, given increased marketing expenses."

Samsung also estimated its fourth-quarter sales totals at 59 trillion won ($53.1 billion), two trillion won short of market estimates of 61 trillion won ($54.9 billion). The less-than-expected sales had been predicted by analysts, and reports of same have knocked 10 percent off the stock price in the last month, cutting out $19 billion in market capitalization.

"Samsung's [marketing] 'special incentive payments' to employees, including domestic and overseas units appear to have been much larger than the market expected; marketing costs of its mobile business might have also been larger," said Kim Young-chan, tech analyst at Shinhan Investment. Full results are expected from Samsung on January 24.




by MacNN Staff

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