Samsung - the world's top maker of smartphones and memory chips - has enjoyed record profits in recent years despite a series of setbacks, including a humiliating recall and the jailing of its de facto chief.
But operating profit during the October to December period was expected to be around 10.8 trillion won ($9.8 billion), down 28.7 percent from a year earlier, Samsung said in an earnings estimate.
The figure was below market consensus of about 13.5 trillion won, according to market researcher FnGuide.
Sales dropped more than 10 percent to 59 trillion won in the period, Samsung said.
It cited "lacklustre demand in the memory business and intensifying competition in the smartphone business" for the dismal outlook.
"Memory earnings fell significantly... due to weaker-than-expected demand amid inventory adjustments at data-centre customers," which led to a "greater-than-expected" drop in chip prices, it said.
"We expect earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business but strengthen in the second half." Demand for DRAM memory chips "will hit a low in the fourth quarter of 2019", he added. Samsung withholds net profit and sector-by-sector business performance data until it releases its final earnings report, which is expected later this month.
For 2018, the firm expects operating profit of 58.9 trillion won, up nearly 10 percent on-year, and sales to inch up 1.6 percent to 243.5 trillion won.
Shares in Samsung Electronics, the flagship subsidiary of the Samsung Group that dominates South Korea's economy, were down 1.68 percent at the close.
Last week Apple said it expected to earn $84 billion in October-December, well down from the $89-$93 billion previously forecast as it blamed a steeper-than-expected "economic deceleration" in China and emerging markets.
While Samsung leads the global smartphone market with a 20 percent share, it faces mounting competition from Chinese rivals like Huawei - which surpassed Apple to take second place last year - offering quality devices at lower prices. Samsung once also had a 20 percent market share in China but has seen its sales tumble to less than one percent of the world's largest smartphone market in the third quarter, and last month announced the closure of its factory in Tianjin.