Samsung Q3 profit misses estimates

As a sign of intensifying competition in the smartphone business, Samsung Electronics has guided for a plunge of around 60% in its third quarter operating profit.

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Source: Bloomberg

Samsung expects to post a Q3 operating profit of between 3.9 trillion won ($3.6 billion) and 4.3 trillion won ($4.0 billion), nearly half the 10.2 trillion won from the previous year.

The company blames the drop on higher marketing costs and lower selling prices.

It should come as no surprise to most investors. Indicators over the past few months have showed that the South Korean tech giant has been losing market share in the phone business in key markets such as China. The mobile division accounts for nearly two thirds of its profit.

Investors have already been selling off shares in Samsung over concerns about its outlook. The stock price is down over 15% year-to-date.

In the near term, things aren’t looking too rosy with the company warning that the fourth quarter’s outlook will be uncertain. That’s despite the launch of a new flagship handset Galaxy Note 4 and Note Edge during the quarter.

The upside is that Samsung appears to be making plans to grow its semiconductor business. On Monday, it announced plans to build a $15 billion chip factory by 2017. This will allow it to tap on the growth of sectors such as wearables, the Internet of Things, and ride on the wider smartphone boom regardless of which phone maker wins.

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