Samsung misses estimates as new phones fail to revive growth

[SEOUL] Samsung Electronics Co posted third-quarter profit that missed analysts' estimates as price cuts on new Galaxy S6 smartphones failed to sway consumers from buying iPhones.

Net income, excluding minority interests, was 5.31 trillion won (S$6.6 billion) in the three months ended September, the company said Thursday. That compares with the 5.4 trillion-won average of 29 estimates compiled by Bloomberg.

Increased marketing spending, including a US$120 rebate programme, hasn't sparked sales of the premium devices that generate fatter profit margins. Samsung is trying to revive demand for Galaxy smartphones through a new mobile payment service and by releasing larger devices at least a month before the new iPhones to recapture market share from Apple Inc.

"Samsung's lower-end smartphones under US$150 sold well, but it didn't help lift the margins at all," Lee Seung Woo, an analyst at IBK Securities Co in Seoul, said before the earnings release.

"Aggressive marketing in the US can help Samsung expand its Galaxy share of the high-end space, but it's giving up a substantial profit margin for it." Sales were 51.7 trillion won in the quarter, compared with estimates for 50.7 trillion won.

Shares of Samsung rose 0.8 per cent to 1,308,000 won in Seoul on Wednesday. The stock has dropped 1.4 per cent this year, compared with a 6.6 per cent gain in the benchmark Kospi index.

BLOOMBERG