On Tuesday, Samsung Electronics warned investors that earnings for its third quarter would be lower than market expectations. The company says it anticipates reporting an operating profit of $3.8 billion for the three-month period ending in September—a decline of nearly 60% year-over-year.
Samsung cites a few reasons for the drop off, including heightened competition in the smartphone market. While the tech giant is selling plenty of handsets, higher marketing costs, fewer shipments of high-end phones and lower average selling prices have negatively impacted operating margins.
Samsung introduced the Galaxy Note 4 and Edge last month, and says that it “cautiously expects” its smartphone shipments to grow in Q4. It adds that it’s also planning a new handset lineup that will include new mid-range and low-end devices, so it can be more competitive in markets like China.
Industry watchers have been wondering how Samsung would respond to new pressure in the high end smartphone market from Apple’s larger iPhones, and ongoing pressure in the low end from Asian manufacturers like Xiaomi. This is, after all, the fourth quarter in a row it’s reporting low profits.
Apple, for its part, will be announcing its (fiscal) fourth quarter earnings on October 20, which covers the same three month period ending in September. It’s also expected to report light smartphone sales, as many consumers likely anticipated the launch of the iPhone 6 and upcoming holiday sales.