Samsung Forecasts Annual Profit Fall Of 32%

Strong smartphone competition is set to push annual profits down for the first time in three years at Samsung Electronics.

The South Korean firm forecast a 32% fall in operating profit to $22.6bn (£15bn), ahead of the publication of its financial results later this month when it will also give a breakdown on the performance.

Fourth quarter profits were expected to drop 37% from a year earlier - with analysts suggesting the figure could have been worse but for strong demand for memory chips within its semiconductor division.

Total (Swiss: FP.SW - news) quarterly sales dropped 12%.

Samsung is hunting new revenue streams from the so-called Internet of Things - connectivity with everyday electronic items - to reduce its recent reliance on smartphones.

It had previously pledged that by 2017 all Samsung televisions would be Internet connected and that within five years all Samsung hardware products would be ready for the Internet of Things.

The company is taking its software, which is designed to challenge Google (Xetra: A0B7FY - news) 's Android operating system, to television sets.

Samsung said its all-new internet-connected televisions this year will run on Tizen, its own operating system.

Its Galaxy smartphones led the market in 2012 and 2013, pushing past Nokia, Motorola and Apple (NasdaqGS: AAPL - news) in terms of sales volume.

But that growth ground to a halt last year as its new models disappointed and it was squeezed on price in the low and mid-end phone markets by Chinese smartphone makers such as Xiaomi, which overtook Samsung in China and India.

Samsung responded by saying it was to reduce the number of models it produces to lower costs and help boost innovation.