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Samsung CEO warns of tough year ahead

Samsung co-chief executive officer Kwon Oh Hyun has warned of another tough year ahead due to a weak global economic outlook and uncertainty in emerging markets.

Published onJanuary 4, 2016

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Samsung may still be selling hundreds of millions of smartphones each year, but the electronics giant is already warning of another tough year. The company cites weak global economic conditions and increasingly competitive markets as reasons to reign in expectations for 2016.

Addressing employees in a New Year statement, Samsung vice chairman and co-chief executive officer Kwon Oh Hyun stated that uncertainty in emerging markets could further hurt the company’s revenue and profit margins, and he encouraged employees to adapt to weakening traditional hardware values to keep the company ahead. A similar message was recently conveyed by Samsung’s mobile chief, Koh Dong-Jin.

“The competition landscape is changing to software and platforms, so we need to build a new system and competence,” – Samsung’s Kwon Oh Hyun

The statement comes amid growing concern that Samsung’s fourth quarter earnings may come in lower than expected. Korea Investment recently lowered its estimate to 6.4 trillion won ($5.41 billion) from 6.8 trillion won. Falling prices in the semiconductor and display markets are expected to hit Samsung’s profits particularly hard, as the company has been relying on additional income from these growing business sectors to offset the falling revenue from its mobile division.

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Samsung has been attempting to shake up its mobile unit to meet the challenge of shifting market conditions. The company appointed Koh Dong-Jin as the new head of the division back in December. Samsung executives are also apparently pointing some blame at its mobile software, which seems to be reflected in this recent statement, and there are said to be plans to cut smartphone shipments this year.

Samsung is expected to issue its official earnings guidance for the fourth quarter this coming Friday.

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