Samsung Electronics net profit sags as Apple iPhones draw away sales from Galaxy smartphones

Written by Reuters | Seoul | Updated: Jan 24 2014, 16:48pm hrs
Samsung Galaxy Note 3Samsung Electronics blames the strong won and high marketing costs to promote Galaxy devices for fall in quarterly profits.
Samsung Electronics Co Ltd posted its first decline in quarterly profit in two years, hit by a one-off special bonus as well as slowing smartphone sales as it braces for a year of tougher competition with rival Apple Inc.

The South Korean maker of Galaxy-brand smartphones said October-December operating profit fell 6 percent on year to 8.3 trillion won ($7.73 billion), in line with its previous estimate.

Operating profit at its cash cow mobile division stood unchanged at 5.47 trillion won, but slipped 18 per cent from July-September's record 6.7 trillion won as new iPhones from Apple drew away sales during the year-end holiday period.

Shares of Samsung Electronics, worth $204 billion, closed down 2.2 per cent on Thursday, compared with the benchmark index which was 1.2 per cent lower.

Samsung Electronics pledges higher dividend after record payout

Samsung Electronics Co Ltd, under pressure to appease investors who have berated it for hoarding the spoils of rapid growth, has pledged to hand out even more profit after almost doubling its full-year dividend to a record $2 billion.

The main rival of Apple Inc has amassed $51 billion in spare cash in recent years by selling as many as one of every three smartphones, but the amount of profit reaching shareholders hit its lowest in 2012 in five years.

Some investors have called for more returns, but the biggest maker of TVs, smartphones and memory chips, has been reluctant to change its payout policy largely because it needs funds for heavy investment.

The maker of Galaxy smartphones, on reporting its first quarterly operating profit decline in two years on Friday, doubled its 2013 dividend yield as planned to 1.0 percent. Investors point out that is still half of Apple's 2.0 percent.

"Our goal on dividend payout for this year is to have that significantly increase from 2013, but I can't say for sure how much we'll be paying," Robert Yi, head of Samsung's investor relations, told analysts after the earnings release.