The company said it would report an operating profit of $3.8 billion for the quarter ending in September — a decline of nearly 60 percent from the same time a year earlier. Sales fell to $44 billion, off 20 percent from a year ago.
The preliminary guidance, which Samsung issued ahead of its quarterly report, due later this month, failed to meet the $5.2 billion average profit estimate of 43 analysts pulled by Thomson Reuters.
The South Korean electronics giant said that while smartphone shipments increased, its operating margins fell because of higher marketing costs, fewer shipments of high-end phones and a lower average selling price for the devices.
The company said it is responding with a new smartphone lineup that will include new midrange and low-end devices, which would make Samsung’s products more competitive in markets such as China.
Scrambling for low-margin sales against even lower-margin competitors in a low-margin market doesn’t seem like the best way to increase margins.