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Chip sales help cushion Samsung Q4 profit decline

2015-01-09 11:00 Global Times/Agencies Web Editor: Qin Dexing

Samsung Electronics, the world's largest smartphone maker by revenue, flagged a lighter than expected profit decline in the fourth quarter Thursday, with memory chip sales cushioning a continued slump in mobile revenue.

Operating profit for the October-December period was estimated at 5.2 trillion won ($4.7 billion), down 37.4 percent from the fourth quarter of 2013, the company said.

The performance nevertheless beat analyst forecasts with profits from high-margin chip sales helping to offset the downturn in the key mobile sector which has struggled in the face of intense competition from cut-price Chinese rivals.

"This is much better than expected," said Greg Roh of HMC Investment Securities, who said sales of Samsung's recently launched outsized Galaxy Note smartphone had helped prop up the faltering mobile division.

"At the same time semiconductor sales have benefited from a weaker won and TV sets sold well during the peak season," Roh said.

Business had picked up from the preceding quarter with the estimated operating profit up 28 percent on the July-September figure.

The estimate offered no net profit forecast or details of divisional earnings, which will be provided in an audited earnings report later this month.

The South Korean behemoth, which is also facing a once-in-a-generation leadership change, had reported a 20 and 50 percent net-profit decline in the second and third quarters of 2014 respectively.

It has been a dramatic reversal after several years of stellar growth, driven by the mobile division.

The company's flagship Galaxy phones have suffered in the high-end market from the popularity of Apple's iPhone 6, while dominance of the middle- and low-end handset segments has been challenged by Chinese firms such as Huawei, Xiaomi and Lenovo.

China is the world's largest smartphone market, and Xiaomi's cheap, feature-packed handsets had already ousted Samsung as the top seller there in the second quarter of 2014.

For the moment, Samsung is still the comfortable leader in global sales volume, but its share of the smartphone market has fallen from 35 percent a year ago to less than 25 percent, according to Strategy Analytics.

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