Samsung Issues Downbeat Earnings Guidance, May See First Profit Decline In Three Years

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Sources: Good Technology Axes More Than 100 Jobs

Last year was a hard one for Samsung Electronics and it doesn’t look like 2015 will be much better. The company just issued earnings guidance for the fourth quarter of 2014 saying that its operating profit will 5.2 trillion won (about $4.74 billion), which means that its profit for the year is likely to be 25 trillion won, the lowest in three years.

Samsung’s smartphone market share enjoyed a sharp climb in 2012, thanks in large part to the popularity of the Samsung Galaxy SIII and Galaxy Note II. Since then, however, its sales have been eroded by stronger competition. In the U.S. and other Western markets, consumers now have much more choices for phablets, or the larger smartphones that Samsung made popular, including Apple’s iPhone 6 Plus.

Meanwhile, shoppers in key growth markets like China and India have an increasing array of inexpensive but still high-performing smartphones from makers including Xiaomi, which not only became the world’s third biggest smartphone maker in 2014, but also received a round of funding that makes it the most highly-valued tech startup.

Samsung Electronics is much more than just a smartphone maker, however, and its memory chip business (which it supplies to other smartphone makers, including Apple), may help its earnings recover toward the end of 2015.

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