Samsung Electronics tips weak 3Q earnings, continued headwinds

Curved UHD televisions are displayed at the Samsung booth at the 2014 International CES in Las Vegas, Nevada.
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Samsung Electronics forecast below-view third quarter earnings results on Tuesday, citing weakness in its mobile business.

The tech giant expects third quarter operating profit of 4.1 trillion won ($3.8 billion) and sales of 47 trillion, below Reuters' forecasts of 5.6 trillion and 50.9 trillion, respectively. This would mark Samsung's fourth consecutive operating profit decline.

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Samsung expects uncertainties for its mobile business to continue in the fourth quarter.

"I think the problem [for Samsung] is competition out of China, in the middle-lower range and also Apple, which just introduced the iPhone 6, which is eating into Samsung's high-end Galaxy range," said Mehdi Hosseini, Senior Analyst and Senior VP of Semiconductors of Susquehanna Financial Group.

"Innovation in the smartphone will come in the display side," Hosseini said. "I'm not really sure what goes inside the phone will make a difference - it's the look, the feel, and the phone factor that will make a difference, and Samsung's Galaxy 6 that is scheduled to be introduced next spring will make a difference. We are still waiting for the company's samples on the flexible display that will be the key difference from the Galaxy 6 and I think that will be the main catalyst."

Smartphone shipments improved marginally in the third quarter it said, noting they could increase slightly in the fourth quarter. However, average sales prices for smartphones fell during the third quarter.

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"The company is going out of its way to guide smartphone units for Q4," Hosseini said. "Q4 smartphone units have historically declined but given that Samsung has been under pressure for the previous quarters, Q4 is looking up on a sequential basis."

Shares of Samsung Electronics shrugged off the below-view earnings guidance, opening 1 percent higher on Tuesday.

Third-quarter results are due around the end of October.