Mixed views on Samsung after stellar 2013

Mixed views on Samsung after stellar 2013

Mixed views on Samsung after stellar 2013

For Samsung Electronics and its 270,000 employees across the globe, 2013 was the best year.

One in every three smartphones sold carried the Samsung brand, with the company shipping more than 300 million of the devices.

South Korea's best known company on the world stage rounded off the year with record annual revenue and profit.

Employees celebrated bonuses totalling more than USD 740 million.

Already selling more smartphones than any other company, Samsung is set to ship even more this year. Its smartphone sales will jump over 20 per cent to nearly 400 million units, according to Counterpoint Technology Market Research.

But that probably will not translate into another year of record earnings, a scenario anticipated by investors with Samsung's share price down 17 per cent since the start of 2013.

For the first time in more than two years, Samsung's quarterly net profit declined from the previous quarter, its latest result showed today.

The maker of Galaxy smartphones said its net profit for the October-December period fell 11 per cent from the third quarter to 7.3 trillion won (USD 6.8 billion).

The mobile business, which generally contributes about 70 per cent of Samsung's earnings, posted its smallest profit in a year after sales decreased slightly from the previous three months.

TVs, long a mainstay product for Samsung, also disappointed.

Samsung hinted that the earnings decline may not be temporary.

"It will be challenging for us to improve our earnings in the first quarter," Robert Yi, head of investor relations, said on a conference call.

Shareholders have constantly fretted that Samsung's cash cow, smartphones, will become less profitable since sales have reached saturation in developed nations and premium phones don't sell as well in developing countries.

Analysts forecast that Samsung's mobile division will suffer a slight decline in profit in 2014, adding to investor jitters that the company has become too reliant on smartphones. The mobile division's earnings in one quarter now exceed what it would previously make in one year.

Samsung's smartphone sales will not grow much in Western Europe or North America and most of its sales growth will come from Africa, Eastern Europe and India where average prices of smartphones are lower, said Thomas Kang, a director at Counterpoint. 

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