While it has been quite the merry-making season for companies like Apple and Facebook (both reporting a healthy quarterly growth rate, however ‘healthy’ is just not sufficient for Apple though), it has been an altogether contradictory story at Samsung’s camp.
The Korean electronics giant reported the worst ever annual profit in three years in an earnings call today. In 2014, the company’s profit was 25 trillion won, a massive 32 percent blow as compared to its glorious high of 36.8 trillion won in 2013.
As for the fourth quarter of 2014, Samsung’s profit fell 27 percent to 5.3 trillion won year-over-year.
But what has been the ‘expected’ biggest hit to Samsung’s profit has been its smartphone business. The Korean giant’s earning from its mobile unit fell by a staggering 64% to a mere 1.96 trillion won, which is a consecutive fifth quarter in decline for the struggling mobile giant.
To further corroborate the above loss, Samsung’s earning from its mobile unit accounted for just 58% of its total operating profit, which is down from 70% in 2013. The company said smartphone shipments fell in 4Q 2014 and will continue to decline this quarter.
This will come as a scathing blow, as Samsung’s prime competitors in China, Apple and the less-than-half decade-old Xiaomi have already overtaken it by a decent margin. In fact, Apple took over Xiaomi recently, thus becoming the number one smartphone vendor by sales in China, a land where most U.S. companies are struggling to stay relevant.
Samsung’s semiconductor business was probably the only face-saving aspect in its entire earnings report. The unit posted 4Q2014 operating profit of 5.3 trillion won and the company is optimistic about this unit’s future, as more and more smartphone vendors are switching to Samsung’s chips.
Samsung had been employing a variety of measures to keep its smartphone business afloat. The company has been selling its non-core companies and sending experts to China for a re-evaluation of the Chinese market. In fact, the company is reportedly planning an acquisition of Blackberry, though both have categorically denied those media reports.
Though no comparison can be drawn in the current scheme of things, but considering the rivalry between Apple and Samsung, the Cupertino giant yesterday recorded the most profitable quarter by an company. Ever. In history.
