Samsung Electronics forecasts fall in profit

Samsung Electronics, the world's biggest maker of mobile phones and TVs, has forecast a fall in profit for the October-to-December quarter. It expects to make an operating profit of 8.3 trillion won ($7.8 billion; £4.8 billion) for the quarter, down 18% from the previous three months. Compared with the corresponding period of the previous year, it is a 6% decline.

Samsung did not say what caused the dip, but analysts said falling profit margins for smartphones had hurt it.

"As the growth in the smartphone sector matures, and vendors seek expansion in emerging economies, prices and operating margins have been coming down," Managing Director of consulting firm Frost and Sullivan, Manoj Menon said.

Menon said that profit margins of smartphone makers were likely to "remain under pressure" in the coming months. Samsung has enjoyed robust growth in recent years, fuelled in part by the success of its smartphone division.

The success of its Galaxy range of smartphones saw the South Korean firm displace Nokia as the world's biggest phone maker in 2012.

However, competition in the sector has increased with other phone makers launching new products. One of Samsung's biggest rivals, Apple, launched two new models of its iPhone - the top-end 5S and a cheaper 5C - in September.

Also in September, Nokia - whose phone division has been bought by Microsoft - unveiled two new phone models. The Taiwanese firm HTC launched its latest handset, the Android-powered One Max, in October.

Analysts said it was likely that the increased competition, especially the launch of new models by Apple, had hit Samsung's performance in the last quarter. "Clearly Samsung is now facing its stiffest competition in the smartphone sector," said Menon.

"Apple did launch its new phones during the quarter and early estimates indicate that they may have had a record quarter for iPhone sales.

"That may also have taken some consumers away from Samsung and hurt its revenue and profits," he said.

BBC