Samsung shares suffer rocky start to 2014 as profit growth expected to slow

Summary:The South Korean company's stock dropped by almost 5 percent, wiping $8 billion off its market cap. It may be small change for Samsung, but fears for profit growth remain.

samsung
Image: CNET

Samsung Electronics saw billions of dollars wiped off its market cap in the first hours of 2014 trading after investors bucked on concerns that the company's profit growth could slow in the new year.

First reported by The Wall Street Journal, shares in the South Korean electronics division opened 1.8 percent lower Thursday, and continued to decline by close to 5 percent, wiping $8.8 billion off the company's market valuation.

It's small change to Samsung, which has a market cap of about $162 billion. But it would have been enough to send alarm bells ringing in the company's C-suite nonetheless.

Mobile remains important to Samsung. Although the company makes chips and other circuitry for other mobile firms — including its rivals, notably Apple — its smartphone unit remains the electronic division's bread and butter.

It's no surprise that all eyes are on mobile for the first quarter, which investors are worried that Samsung may not be able to keep its profit growth momentum ticking over. Sales could further decline in growth as competition comes to a head with cheaper devices slicing away Samsung's electronic division's overall bottom line.

Motorola, for instance, is squeezing the mobile market with its $179 priced Moto G, and its more powerful sibling the Moto X is now $399. Those that have previously bumbled through the mobile world — like Motorola — which recently saw a significant injection from its Google acquisition, are ramping up their efforts to compete.

Samsung's operating profit for the last three months ending December — the often lucrative holiday season — grew by 9.2 percent a year earlier, according to various analysts. That figure is down about 26 percent on the third-quarter.

The company is expected to report its forth-quarter estimates on Tuesday.

Topics: Samsung

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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