The numbers aren't good.
The world's number one smartphone manufacturer by shipments has revealed its earnings guidance for the third quarter of 2014. The numbers aren't good. In the previous quarter which ended September, Samsung's operating profit fell roughly 60 percent to 4.1 trillion won or $3.8 billion.
Samsung reported an operating profit of 10.2 million won in the same quarter last year. Meanwhile, the South Korean technology giant's consolidated revenues are estimated to be around 47 trillion won. However, Samsung didn't comment on the details of its earnings per division and its net income.
It's worth noting that the purpose of earnings guidance is to give investors an idea of what to expect from the company in the future. The announcement is Samsung's biggest drop in quarterly profit since 2009. The company has been battling Chinese competitors including Lenovo and Xiaomi. It didn't help when Apple announced the larger iPhone 6 Plus.
Samsung's mobile division accounts to more than 60 percent of its overall profit from mobile devices. Because of the competition, sales have been declining. Fortunately, Samsung has other profitable divisions. For example, its chip business is thriving.
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According to Doh Hyun-woo, an analyst at Mirae Asset Securities, Samsung's annual chip sales could rise 34 percent to 11.5 trillion won next year. “Samsung does make good memory chips,” Hyun-woo tells the Wall Street Journal. Meanwhile, Samsung is planning to invest 15.6 trillion won ($14.7 billion) to build a new chip manufacturing plant in South Korea.