Samsung whiffs on earnings thanks to iPhone and Asian rivals

As reported by Bloomberg, Samsung's fourth quarter earnings fell short of analyst estimates as the company's hold of the high-end smartphone market eroded with the launch of Apple's iPhone 5s.

Samsung reported net income of 7.22 trillion won, or about $6.7 billion for the three months ending in December. According to the publication's compilation of estimates from 11 analysts, the company was expected to bring in an average of 8.2 trillion won, or $7.6 billion.

Operating income came in at 8.3 trillion won, which represents the firm's first quarter-over-quarter decline since 2011.

The smartphone giant is apparently seeing competition from both sides of the market, analysts said. Apple continues to dominate the high-end with its iPhone lineup, while a burgeoning low end is quickly being saturated by upstart device makers like Lenovo and Huawei. A large portion of Samsung's handset volume is weighted toward the the mid- to low-tier segment, helping the company keep the title of world's largest handset maker.

Adding to the firm's woes is a strengthening South Korean won — up 2.4 percent against the dollar this past quarter — which dampened the value of Samsung's income.

"Samsung's two major challenges for 2014 are to maintain its mobile-phone leadership in China and the U.S., while simultaneously growing its tablet business quickly enough to knock Apple iPad from its perch," said Neil Mawston of Strategy Analytics.

Daewoo Securities estimated the Galaxy S4 shipments of 9 million units during the fourth quarter, a number much lower than its December estimate of 13 million units. This compares to 17 million units sold in the third quarter, Daewoo said. By contrast, Apple sold 33.8 million iPhones over the three months ending in October.

As for future products, Samsung is looking to release its next-generation Galaxy S5 in April, which will be paired with a follow-up to the Galaxy Gear smartwatch. Samsung's executive vice president of mobile Lee Young Hee offered the roadmap earlier in January, but failed to elaborate on the company's wearable device plans.

With a so-called "iWatch" expected from Cupertino later this year, Samsung is looking to make inroads in the wearables segment before Apple fields an entry. Initial demand for the first-generation Galaxy Gear was moderate at best, with announced shipments — not sales — of 800,000 units over the product's first two months on the market.

Over the past quarter, the Korean firm pushed out a number of smartphone, "phablet" and tablet devices in a variety of screen sizes, while Apple kept its mobile product lineup revisions fairly uniform. Only the iPad Air saw a significant overhaul in terms of chassis size, but even that device carried over the same 9.7-inch display size from last year's model. Comparatively, it seems as though Samsung is aggressively trying to fill every niche it can.

Apple is also rumored to be jumping on the big-screened-device bandwagon, however. A report from The Wall Street Journal on Thursday cited inside sources as saying larger handsets are on tap for 2014, including a 4.5-inch version and a jumbo model with a screen size above 5 inches.

Apple is slated to report its earnings for the quarter ending in December on Jan. 27, at which time iPhone and iPad sales numbers will be revealed.