Samsung to narrow operating profit gap with Apple significantly

Samsung to narrow operating profit gap with Apple significantly. January. 09, 2017 07:05. by Ji-Hyun Kim jhk85@donga.com. As Samsung Electronics recorded better than expected in the fourth quarter of 2016, there is a prospect that Samsung will narrow the gap with Apple in operating profit to the lowest level.

Samsung Electronics announced its fourth quarter profit on Sunday and expected its operating profit rate of 17.36 percent, an increase of 1.16 percentage point from the second quarter with 16.20 percent and the highest for the past two years.

The gap in operating profit between Samsung and Apple had been significant. In 2015, the gap between Apple (31.51 percent) and Samsung (12.69 percent) amounted to 18.82 percentage points in the first quarter, while Apple's operating profit was 2.76 times higher than Samsung's in the fourth quarter.

The gap began to reduce last year and the number decreased by one-digit with 7.62 percentage points in the second quarter, which was the slightest record until then.

Samsung posted a startling record in the fourth quarter of 2016 thanks to the semiconductor boom, but Apple's operating profit has declined. If Apple records at around 20 percent in its fourth-quarter operating profit, the gap between the two will be reduced by around 3 percentage points, the lowest gap ever.

Apple trimmed down the salary of its CEO Tim Cook and other executives for the first time as they missed its revenue and profit goals for 2016.

Apple announced on Friday (local time) that annual sales of 215.6 billion dollars for fiscal 2016 (from October 2015 to September 2016), 3.7 percent below the company’s goal. Apple executives will receive about 89.5 percent of their targeted annual incentives, as opposed to the 100 percent they previously received. Cook’s 2016 salary was reportedly reduced by 15 percent from the previous year, as he received 8.75 million dollars in total compensation.