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Samsung Electronics forecasts 60% fall in quarterly profit | Samsung Electronics forecasts 60% fall in quarterly profit |
(about 1 hour later) | |
Samsung Electronics has forecast a 60% fall in quarterly operating profit from a year ago, missing estimates, because of slowing Galaxy smartphone sales. | |
The world's biggest mobile phones and TV maker said it expects an operating income of 4.1tn won ($3.8bn; £2.5bn) for the three months to September. | The world's biggest mobile phones and TV maker said it expects an operating income of 4.1tn won ($3.8bn; £2.5bn) for the three months to September. |
That is below analysts' expectations for earnings of 5.2tn won. | That is below analysts' expectations for earnings of 5.2tn won. |
The company's full financial results will be released later this month. | The company's full financial results will be released later this month. |
Samsung's mobile division, its biggest business, has been struggling to maintain its dominance against rivals such as Apple and Chinese smartphone-makers Xiaomi and Lenovo. | Samsung's mobile division, its biggest business, has been struggling to maintain its dominance against rivals such as Apple and Chinese smartphone-makers Xiaomi and Lenovo. |
Its flagship Galaxy smartphone line has been losing market share to cheaper models that also have large screens and multiple features. | Its flagship Galaxy smartphone line has been losing market share to cheaper models that also have large screens and multiple features. |
The South Korean company said quarterly sales amounted to 47tn won, which was below analyst estimates for 50.3tn won. | The South Korean company said quarterly sales amounted to 47tn won, which was below analyst estimates for 50.3tn won. |
"Smartphone shipments increased marginally amid intense competition," Samsung said in a statement. | "Smartphone shipments increased marginally amid intense competition," Samsung said in a statement. |
"However, the operating margin declined due to increased marketing expenditure and lowered average selling price." | "However, the operating margin declined due to increased marketing expenditure and lowered average selling price." |
The company also said it is "preparing new smartphone line-ups featuring new materials and innovative designs, as well as a series of new mid-to-low end smartphones". | The company also said it is "preparing new smartphone line-ups featuring new materials and innovative designs, as well as a series of new mid-to-low end smartphones". |
Samsung shares rose about 1.6% in Seoul despite the weak profit outlook. | |
Chip plant | Chip plant |
Samsung announced on Monday that it would spend about $15bn on a new semiconductor plant in South Korea, to meet the growing demand for memory chips. | Samsung announced on Monday that it would spend about $15bn on a new semiconductor plant in South Korea, to meet the growing demand for memory chips. |
It is set to be the biggest single investment in a chip factory, and construction will begin in the first half of next year with operations due to start in 2017. | It is set to be the biggest single investment in a chip factory, and construction will begin in the first half of next year with operations due to start in 2017. |
Samsung is a major chip supplier to other electronics firms, including major rival Apple. | Samsung is a major chip supplier to other electronics firms, including major rival Apple. |
Samsung is also facing some pressure at its consumer electronics division, which makes televisions, air conditioners and other appliances. | Samsung is also facing some pressure at its consumer electronics division, which makes televisions, air conditioners and other appliances. |
Sales and overall profit are forecast to have dropped because currency fluctuations made Japanese-made rival products cheaper to buy. | Sales and overall profit are forecast to have dropped because currency fluctuations made Japanese-made rival products cheaper to buy. |
The Korean won strengthened about 3.5% against the Japanese yen in the third quarter. | The Korean won strengthened about 3.5% against the Japanese yen in the third quarter. |