Is Nokia's 2007 Decline a Lesson for Samsung Today?

Junko Yoshida, EETimes
1/24/2014 02:05 PM EST

MADISON, Wis. — In the results posted Friday for the fourth quarter of 2013, Samsung Electronics reported an operating profit of 8.31 trillion won ($7.7 billion), which missed analyst expectations by a whopping 20%.

Samsung also reported its first quarterly operating profit decline in two years -- an 18% drop from the $9.4 billion it reported for the third quarter. Though it posted a record $54.95 billion of revenue, the industry is focused now on its potential growth limits in the coming quarters.

The Korean company also issued a warning about anemic earnings in the current quarter. It's blaming "weak seasonality" in the IT industry early in a calendar year. It expects performance to pick up in the second half, but admitting a disappointment in advance is hardly good news.

Nobody is predicting the beginning of the end for Samsung, but this might be an opportune moment to compare its situation today with Nokia's back in 2007. Today the mobile division is responsible for more than half of Samsung Electronics' revenue and profit. Further, Samsung's share of the global smartphone market is more than 35%, and Nokia's share peaked at 39% in the third quarter of 2007.

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