Samsung Suffers Profit Slip

Credit: ubergizmo

Apple (NASDAQ:AAPL) arch-rival Samsung Electronics (SSNLF.PK) posted its first profit decline in nine quarters, according to pre-earnings guidance for the fourth quarter of 2013 released by the company on Tuesday.

The South Korea-based company said it posted an operating profit of approximately 8.3 trillion won and saw sales of 59 trillion won in the final quarter of 2013.

According to a report from Bloomberg, that’s the first drop in profit Samsung has seen since third-quarter 2011. In the fourth quarter of 2013, the company posted a profit of 9 trillion won. Bloomberg cited increased competition from Apple with the release of the iPhone 5C and iPhone 5S in September, as well as pressure from Chinese companies turning out cheap, low-end devices as reasons for Samsung’s decline.

Analysts surveyed by Bloomberg expected Samsung to post an operating profit of 10 trillion won. The company’s fourth-quarter sales represented an increase of just 5.3 percent, the slowest growth in sales the company has posted since 2011.

Despite the hit taken from Apple, Samsung isn’t without a retaliation plan for 2014. According to the latest research from Gartner, the tablet market is expected to grow 54 percent in 2014, and Samsung will take advantage of the increased interest in tablets by flooding the market with various devices in multiple sizes, Taiwan-based DigiTimes reported this week.

The company will put out tablets with multiple models in different sizes like 7-inch, 8-inch, 10-inch, and 12-inch size tablets, which will be separated into three pricing ranges: the entry-level Lite series, the mainstream series, and the high-end Pro series.

Samsung’s tablet strategy appears to be similar to the approach it took to the smartphone market. Apple’s biggest rival has long used its varied smartphone product line to attract more customers who are looking for different sizes of devices in various price ranges.

Samsung is also urging its employees to think outside the box and come up with new ideas amid the challenge from Apple and a smartphone market that lacks innovation. “We have to change once again,” Chairman Lee Kun Hee told employees. “We must give a bigger push for innovations, including in business structure, so that we can lead industry trends.”

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