Samsung’s Q4 2013: Major profit, but clear signs of its smartphone squeeze

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Samsung’s Q4 2013: Major profit, but clear signs of its smartphone squeeze

Samsung may have pulled in $6.8 billion last quarter, but its earnings show that the competition is taking a toll on its smartphone sales.

The company said that earnings from its mobile business dipped 18 percent from the record quarter before to $5 billion, flat year-over-year. That kind of profit would normally be something to gush over, but this is Samsung we’re talking about, and this was a holiday quarter. So declines matter.

As we wrote a few weeks ago, the squeeze on Samsung’s smartphone numbers is the result of a few forces. Not only are people buying fewer high-end phones than they did just a few quarters ago, but they’re also increasingly going for Apple devices when they do. The story is roughly the same on the low-end, where Chinese smartphones are also nibbling away at Samsung’s marketshare. And all of this is putting major pressure on the source of two-thirds of Samsung’s profits.

In short, blame the competition.

Going forward, Samsung says to expect increased price and product competition “amid accelerated replacement from feature-phones to smartphones.”

In other words, things are only going to get harder for the company, especially now that Apple’s inked a deal to sell iPhones on China’s largest carrier.

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