Smartphone vendor Samsung Electronics will lower its mobile marketing spend this year relative to revenue, after big promotional spending hit fourth-quarter profit.
The maker of the Galaxy smartphone said that its net earnings for the October-December period rose 4 percent compared to a year earlier and fell 11 percent from the third quarter to 7.3 trillion won ($6.8 billion).
Samsung Electronics blamed the strong won, high marketing costs to promote Galaxy devices and other one-time expenses, such as special bonuses to employees.
Quarterly sales came to 59.3 trillion won, essentially unchanged from the previous quarter and up 6 percent over a year earlier.
Samsung’s IT and Mobile Communications division, which generated nearly 70 percent of its profit in the last few quarters, saw its profit fall to 5.5 trillion won from the previous quarter’s 6.7 trillion won.
October-December operating profit fell 6 percent on year to 8.3 trillion won ($7.7 billion), in line with a previous estimate of 8.3 trillion won.
“We’ll actively leverage global sports events such as the Sochi (Winter) Olympics and our retail channels… but we will try to raise the efficiency of our marketing spend and lower our overall mobile marketing budget to revenue this year compared with last year,” said Samsung senior vice president Kim Hyunjoon.
Interestingly, Samsung Electronics posted its first decline in quarterly profit in two years, hit by one-off special bonus as well as slowing smartphone sales as it braces for a year of tougher competition with rival Apple, Reuters reported.
The world’s biggest smartphone maker kept its full-year investment plan conservative and warned it would be difficult to increase earnings in the first quarter as demand pulls back from the year-end holiday period.
Samsung said its 2014 capital expenditure will be similar to 2013’s 23.8 trillion won.
Operating profit at its cash cow mobile division stood flat at 5.47 trillion won, but slipped 18 percent from July-September’s record 6.7 trillion won as new iPhones drew away sales during the year-end holiday period.
Operating profit from display unit Samsung Display tumbled 90 percent to 110 billion won as weaker-than-forecast sales of the Galaxy S4 left smartphone screens sitting in the inventory, while subdued sales of television sets also had an impact on TV screen shipments.
Meanwhile, some analysts are speculating that Apple may have sold 56.67 million units of iPhone, 26.4 million iPads, and 4.41 million Macs in the fourth quarter of 2013. Apple will report its fiscal Q1 result on Monday, January 27.
According to a Bloomberg report, analysts cut profit estimates for Sony over the past two months after slow holiday sales of televisions, personal computers and cameras. Net income will be 23.1 billion yen ($221 million) for the year ending March, more than 20 percent less than Sony’s latest forecast. Interestingly, Sony smartphones do not figure in this list.
