Samsung shares down on profits warning

<p>Shares in Samsung have fallen today.</p>

The share price of Samsung has fallen today (January 7th) after the company issued a warning over its profits for the final quarter of 2013.

For the October to December period, the firm stated that it expects an operating profit of 8.3 trillion won (£4.8 billion) to be relocated.

This would be down 18 per cent from the previous three months and six per cent lower than the amount Samsung made in the last quarter of 2012.

Manoj Menon, managing director of consulting firm Frost & Sullivan, told the BBC that the level of competition in the sectors Samsung operates in has caused problems for the company.

"As the growth in the smartphone sector matures, and vendors seek expansion in emerging economies, both prices and operating margins have been coming down," he said.

Apple and Samsung have been increasingly dominant in the smartphones sector in the last few years, with the iPhone and the Galaxy S series among the biggest selling phones on the market.

But the arrival of new manufacturers from the Far East, as well as companies such as Google moving into the industry, has made it harder for firms to continue making large profits.

China market

Samsung currently has the greatest share of the smartphones market in China, but this is expected to be hit by the launch of a more affordable version of the iPhone 5.

Apple announced the cheaper model of the smartphone last year and it is believed the company is targeting the iPhone 5C firmly at the Chinese market.

Kim Young-chan, tech analyst at Shinhan Investment Corp, explained that another factor to have impacted on the profits Samsung has made in the fourth quarter of 2013 could be a special bonus given to employees.

"Samsung's special incentive payments to employees including domestic and overseas units appear to have been much larger than the market expected," he said.

Following the profits warning being issued by the firm, its share price slipped by 0.23 per cent in the main stock exchange in Korea.

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