Samsung's Lower First-Quarter Estimate Highlights Smartphone Challenges

[Ron Burgundy]

Samsung Electronics Co Ltd on Tuesday said it is on track to post its second straight quarter of profit decline, as slowing smartphone sales growth continued to weigh on earnings. The South Korean tech giant estimated that its January-March operating profit fell by 4.3 percent to 8.4 trillion won ($7.96 billion), slightly below an average forecast of 8.5 trillion won by 40 analysts polled by Thomson Reuters I/B/E/S. The world's biggest smartphone maker is counting on the fifth version of its flagship Galaxy S smartphone, which goes on sale globally from Friday, to right the ship and prove the firm's staying power as a mobile innovator. Underscoring the challenges, Samsung priced the S5 about 10 percent cheaper than the S4 even though main rival Apple Inc is not widely expected to update its line-up until September. Analysts said the company's efforts to rein in component costs and make products that appeal to a wider audience will be crucial as Samsung braces for what could be its first annual profit decline in three years.

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