Samsung sales unchanged as company faces stiffer competition, new trends

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Sharecast News | 08 Jan, 2016

Updated : 17:40

Samsung reported lower than expected earnings as it grappled with greater competition, a weakening Chinese economy and a shift towards software and away from hardware as the main money-spinners for technology companies.

According to some market commentators, the South Korean company was being squeezed by greater competition from Apple in the high-end segment for smartphones and by Xiaomi and Huawei Technologies in the segment for more budget conscious customers.

Samsung's operating income reached 6.1trn won ($5bn) in the three months to the end of December, the company said in its preliminary results released on Friday.

Analysts had forecast profits of 6.64trn won.

Sales for the quarter printed at 53trn won, largely unchanged from a year earlier.

A breakdown of the figures by divisions and for net income would not be forthcoming until the manufacturer released its final results later in January.

The manufacturer, who was also one of Apple's - among other big names - suppliers for displays was likely also feeling the heat as analysts marked down their forecasts in recent days for the California-based giant's iPhone sales.

Its chip manufacturing arm was also under pressure as prices for DRAM memories tumbled in 2015.

Apple's share price dropped below the $100 mark on 7 January after UBS slashed its projection for iPhone shipments in fiscal year 2016 to 220m units, for a 5% fall on the previous year.

Nonetheless, Steven Milunovich, the analyst at the Swiss broker who issued the report, added that:"The good news is that the main problem may be the timing of upgrades. Apple is not losing share—the brand and ecosystem have never looked stronger. Whether upgrade installment plans remains to be seen. Downside might be $85 [per share] or 9.4 times a conservative $9 F16 EPS."

Shares of Samsung finished 0.69% higher at 1.17m won on Friday in Seoul trading.

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