Quarterly loss puts Samsung on track for worst year since 2011

SAN FRANCISCO 

Samsung announced Thursday that net profits fell 49 percent for the quarter ending in September.

The third quarter numbers put the company on track to have its worst year since 2011.

Samsung is still the global leader in smartphones, but has lost market share throughout 2014, a trend that continued in the fiscal quarter that ran July to September.

In the premium market, Apple leaps ahead of Samsung, with the South Korean technology giant also losing on the bottom end as well to Chinese companies like Lenovo and Xiaomi, which have established themselves as strong competitors producing low-cost smartphones. 

"The mid-to-low end market is growing rapidly, and we plan to respond actively in order to capitalize on that growth," Samsung Senior Vice President Kim Hyun-joon said in a conference call with analysts and investors.

Detailing its strategy for the near future, Samsung executives said the company will retool its cheaper product line-up. To compete with the new crop of Chinese phone manufacturers, Samsung will lower the prices of its phones, which will be built with more powerful components in order to stand out to consumers.

The company claimed its third quarter operating profit plummeted 60.1 percent compared to the same period last year, to $3.9 billion (4.1 trillion won).

For the first time in three years, Samsung’s semiconductor business overshadowed its mobile division to drive the most profit for the company. The mobile division’s profit accounted for 43 percent of Samsung’s overall operating profit.

As recently as January, the mobile division had driven nearly 75 percent of operating profit.

“We will focus on obtaining a sustainable double-digit percentage margin” for smartphones, Hyun-joon told investors.

Another area Samsung is hoping to conquer early is the infant wearables market. The company announced Thursday that its Gear S smartwatch will be available Nov. 7 to U.S. customers.

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