Samsung’s Q4 2013: Major profit, but clear signs of its smartphone squeeze

Samsung may have pulled in $6.8 billion last quarter, but its earnings show that the competition is taking a toll on its smartphone sales.

The company said that earnings from its mobile business dipped 18 percent from the record quarter before to $5 billion, flat year-over-year. That kind of profit would normally be something to gush over, but this is Samsung we’re talking about, and this was a holiday quarter. So declines matter.

As we wrote a few weeks ago, the squeeze on Samsung’s smartphone numbers is the result of a few forces. Not only are people buying fewer high-end phones than they did just a few quarters ago, but they’re also increasingly going for Apple devices when they do. The story is roughly the same on the low end, where Chinese smartphones are also nibbling away at Samsung’s marketshare. And all of this is putting major pressure on the source of two-thirds of Samsung’s profits.

In short, blame the competition.

Going forward, Samsung says to expect increased price and product competition “amid accelerated replacement from feature-phones to smartphones.”

In other words, things are only going to get harder for the company, especially now that Apple’s inked a deal to sell iPhones on China’s largest carrier.