Moving into 2014, a weak outlook is offered by Samsung Electronics as sales of the world’s leading smartphone maker fell slightly during the fourth quarter. Much of the last two years have been spent by the South Korean giant in eating Apple Inc.’s lunch. Sales of the Galaxy branded devices have zoomed past most of the devices made by other manufacturers. However, in the fourth quarter, there was tough competition from Apple, which shows that this schoolyard fight is not over just yet. It was in the start of the fourth quarter that the Samsung Galaxy Note 3 went on sale. It is now regarded as one of the best devices of 2013 and was a bona-fide hit.
Nevertheless, although Samsung was able to sell more than 10 million of this particular device, apparently they weren’t enough to boost the financial performance of the company. The company reported the first drop of profits that it has seen in the past two years. For the October-December period, the South Korean firm stated that it had made sales worth $54.95 billion and had made a profit on them of about $7.73 billion. The revenue recorded was extremely high, but in comparison to the profit of the July to September period, there was an 18% drop in profits.
To explain the reason behind its slumping profit, there was only one off-balance sheet item that was cited by the firm. Currency exchanges and employee bonuses had dealt a huge blow to the finances of the technology giant. The company announced that in the fourth quarter, there had been a slight dip in the sales of smartphones, but as no hard sales figures for devices are reported by the company, it isn’t easy to identify the number of devices that were sold in the quarter. Sales between 85 to 87 million have been estimated by the analysts.
Apart from that, compared to one year ago, the sales of Samsung’s tablets seem to have doubled up and it is probably because of the latest additions made by the company to its lineup. 66% of the total revenue that was earned by the company was contributed by the sales of tablets, smartphones and their related components. Its appliances and television business generated the rest of the revenue. The softness that was seen in the revenues from its television units was blamed by the company on an over-supplied TV panel market.
Also, although it is claimed by Samsung that there was only a slight dip in its smartphone sales, it is alarming to note that this fall occurred in the holiday quarter. It is usually the opposite as most companies notice boost in their sales because of holiday gifting. Samsung wasn’t the only company that reported a fall in sales as Nokia also faced the same issue. It is possible that Samsung’s sales were affected because of the iPhone 5S that went on sale a couple of days before the holiday season. A slow first quarter is predicted by the South Korean giant, but it might pick up when it finally launches S5.