Samsung’s Q4 profit falls but beats forecast

By Youkyung Lee, AP

SEOUL — Samsung Electronics Co. said its quarterly earnings dropped 27 percent in the fourth quarter as it struggled in its battle of big phones with Apple. But its result still beat forecasts thanks to component businesses that performed better and a modest improvement in high-end handset sales.

The world’s top smartphone maker reported Thursday that its October-December earnings were 5.3 trillion won (US$4.9 billion), compared with 7.3 trillion won a year earlier.

Samsung’s quarterly net income has dropped over a year earlier for four straight quarters. Still, the bottom line was a moderate recovery from the previous quarter’s 4.2 trillion won and higher than analysts’ forecasts of 4.4 trillion won, according to financial data provider FactSet.

Sales fell 11 percent to 52.7 trillion won from a year earlier while operating profit slumped 36 percent to 5.3 trillion won, in line with Samsung’s preview earlier this month.

The Korean company’s mobile business began to struggle in 2014 while Apple enjoyed record-high sales of bigger iPhones that were released in September.

Samsung is still believed to have retained its lead over Apple in smartphone unit shipments during the last quarter, but Apple must have narrowed its gap with Samsung, analysts said.

Apple reported stellar earnings on Tuesday thanks to its new plus-sized iPhones that hit record-high sales. Apple sold 74.5 million iPhones during the three months that ended Dec. 31. Samsung does not give its smartphone sales figures, but Lee Jae-yun, an analyst at Yuanta Securities Co., estimated that Samsung sold 77 million smartphones.

Samsung’s IT and Mobile division that makes Galaxy phones recorded operating profit of 1.96 trillion won in the October-December quarter, less than half of the 5.47 trillion won operating profit in the same quarter of 2013. But that was better than the July-September period’s 1.75 trillion won operating income.

The recovery from the previous quarter showed that the dramatic decline in its smartphone business may have stopped. The company said its mobile phone business’s performance improved from the three months earlier because the Galaxy Note 4 and other high-end smartphones saw higher sales that offset a drop in sales of cheaper phones.

Its management of marketing expenditures was efficient, its statement said.

The company was shy of giving a clear guidance of how its mobile business would perform during the current quarter. It said it will focus on ��the successful implementation of its new product line-up strategy.��

Facing a dramatic fall in smartphone sales, Samsung vowed last year to reduce the number of smartphone models to streamline businesses and to adopt a change in design by using metal in more high-end models.