Samsung fourth-quarter, fiscal year 2014 results shows drop in profits

Samsung logoSamsung released its Q4 and FY 2014 results today, and as expected, the news was not good. The past three years have resulted in growth for the company, but fiscal 2014 shows an annual earnings decline, in spite of strong performance by the company's chip division. The earnings from smartphones, tablets, and other mobile devices fell to 1.96 trillion Korean won ($1.8 billion), a 64.2 percent decline from the year-ago quarter. The news comes on the heels of a record-shattering report from its main rival, Apple.

Samsung's smartphones and tablets have been experiencing pressure from Xiaomi at lower price points, and from Apple on the high end against Samsung's flagship Galaxy smartphones, which have largely failed to perform to expectations apart from the Galaxy Note 4, particularly in the Asian market. Recent studies have shown Apple's share in the "greater China" market more than doubling since the release of the larger-screen iPhone 6 and iPhone 6 Plus, from just shy of 15 percent to 33 percent. As a result, new reports indicate that Apple and Samsung are now tied for the title of top smartphone producer worldwide.

Ironically, Apple's success against Samsung in mobile devices in Asia is fueled, in part, by Samsung itself. While not the exclusive supplier anymore, most iPhones sport Apple-designed processors that are actually manufactured by Samsung, and this is a big factor in helping the Korean company's semiconductor division profits rise to a four-year high of 2.7 trillion won (nearly $2.5 billion US) for the year.

Samsung's total Q4 revenues amounted to 52.73 trillion won ($48.2 billion), which was an 11 percent increase quarter-to-quarter, while Q4 profits were only totaled 5.3 trillion won ($4.88 billion), though this was a rise from the previous quarter. To put this in perspective, Apple's Q4 revenue was $74.6 billion, with a quarterly profit of $18 billion. However, Samsung's total operating profits for 2014 amounted to 25 trillion won ($22.9 billion), an 11.8 trillion won drop from 2013, and the lowest since 2011.

Samsung is reportedly switching to using its own chips in its forthcoming flagship Galaxy S6 smartphone, based on a rumor that overheating issues were discovered with Qualcomm's Snapdragon 810, and Samsung didn't want to take a chance on quality issues after numerous reports of battery problems with the S4 and S5. The S6 is likely to be unveiled at Mobile World Congress in March. Qualcomm, also reporting its results today, announced the loss of "a major customer" and adjusted its own revenue forecasts for 2015, lending credence to the speculation that it had been dropped by Samsung.

Source: Electronista

Tags: report, Samsung

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