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Samsung earnings disappoint amidst concerns of slowing smartphone growth

post #1 of 92
Thread Starter 
Though Samsung Electronics reported a record operating profit for its June quarter, the number still came in below analysts' expectations, sending the company's stock tumbling on Friday.

Samsung
Samsung's headquarters in South Korea. Photo via Wikipedia


Shares of Samsung lost nearly 4 percent after Samsung released guidance ahead of its full June quarter results, which will be reported on July 26. The company revealed that its operating profit grew 47 percent year over year to 9.5 trillion won, or $8.3 billion.

But market watchers had expected Samsung to see operating profits of 10.16 trillion won, according to Reuters. The June quarter is just the latest disappointment for investors, who have seen Samsung shares drop more than 15 percent over the last month.

Samsung has also become increasingly dependent on its smartphone business, with that segment of the company accounting for some 70 percent of its total profit. In contrast, iPhone sales account for about half of Apple's revenue.

Investor disappointment in Samsung's record quarter parallels Apple's own struggles since the launch of the iPhone 5 last year. For its fourth quarter of fiscal 2012, Apple saw profits grow 25 percent, but shares of AAPL still tumbled as investors grew increasingly concerned about the company's future.

Those fears became a reality this year, in the company's second quarter of fiscal 2013, when Apple saw its profits fall for the first time in a decade. The company's profits were down about 18 percent year over year to $9.5 billion, despite record second quarter sales of $43.6 billion.

Both Apple's iPhone 5 and Samsung's Galaxy S4 compete in the high-end smartphone segment ? a market that industry watchers believe could be reaching saturation. That's helped to fuel speculation that Apple could launch a new low-cost iPhone this year to target customers who prefer unsubsidized handsets that are not tied to a new two-year service contract.
post #2 of 92
The iPhone accounts for half of Apple sales, but likely more than half of Apple's profit as it's the product with highest margin. Whether it approaches 70% is a question that only Apple management knows.

The high end smart phone market is quickly reaching saturation. Those in the developed world who can afford it already had one. The growth will be in the low and mid-end tiers, which Apple is sorely lacking. I don't think Apple will ever chase the cheap crowd, it's not their DNA. But the mid-tier phones, those that cost $300 - $400, have a huge market that Apple so far is leaving to the Android vendors.
post #3 of 92
Oh dear what a shame .... /s

If this were Apple news the stock would be halved by now, I wonder what Cramer will say about this? 1biggrin.gif
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
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Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
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post #4 of 92
Quote:
Originally Posted by zoffdino View Post

The iPhone accounts for half of Apple sales, but likely more than half of Apple's profit as it's the product with highest margin. Whether it approaches 70% is a question that only Apple management knows.

The high end smart phone market is quickly reaching saturation. Those in the developed world who can afford it already had one. The growth will be in the low and mid-end tiers, which Apple is sorely lacking. I don't think Apple will ever chase the cheap crowd, it's not their DNA. But the mid-tier phones, those that cost $300 - $400, have a huge market that Apple so far is leaving to the Android vendors.

So you don't count the 4 and 4S? You consider them high end still?

post #5 of 92
Of no particular concern.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #6 of 92

Now Samsung is also disappointing analysts and investors with record profits. Is there no end to their copying of Apple? What will they do next - issue dividends and buy back shares? Fire their software head?

 

It is impressive how they earned these record profits by only shipping but not selling millions of phones. Now that's innovation.

post #7 of 92
Quote:
Originally Posted by Suddenly Newton View Post

Of no particular concern.

Then what's the point of mentioning anything. Why is it interesting to share what you are not concerned about?

 

You might have written "not currently drinking champagne".

post #8 of 92
Quote:
Originally Posted by zoffdino View Post

The iPhone accounts for half of Apple sales, but likely more than half of Apple's profit as it's the product with highest margin. Whether it approaches 70% is a question that only Apple management knows.

The high end smart phone market is quickly reaching saturation. Those in the developed world who can afford it already had one. The growth will be in the low and mid-end tiers, which Apple is sorely lacking. I don't think Apple will ever chase the cheap crowd, it's not their DNA. But the mid-tier phones, those that cost $300 - $400, have a huge market that Apple so far is leaving to the Android vendors.

 

Well, isn't Apple supposed to be "transparent"?   After all, Apple is the only company willing to share their "sales/sold" numbers with their customers.  (/s)

 

Making cheaper device is not in Apple's DNA?  Ever heard of iPod mini? nano, perhaps?

 

I think 47% quarterly profit (YoY) is pretty awesome -- that's another (sixth) consecutive quarter of record profit --, but Samsung is deservedly getting pounded for setting investors' expectation too high -- 500 million mobile devices in 2013? What were they thinking?

post #9 of 92
Quote:
Originally Posted by stelligent View Post

Now Samsung is also disappointing analysts and investors with record profits. Is there no end to their copying of Apple? What will they do next - issue dividends and buy back shares? Fire their software head?

 

It is impressive how they earned these record profits by only shipping but not selling millions of phones. Now that's innovation.

If it's so rosy I wonder why they want to hide it. Do you?

post #10 of 92

The article says that industry watchers are concerned about market saturation but it should be clear to anyone, even little kids have cellphones these days. The tablet is the growth area right now and it seems no-one can get traction against the iPad...

post #11 of 92
Quote:
Originally Posted by stelligent View Post

It is impressive how they earned these record profits by only shipping but not selling millions of phones. Now that's innovation.

 

1) Ship phones to warehouse to collect dust

2) Harvest dust

3) ???

4) Profit

post #12 of 92
Quote:
Originally Posted by ascii View Post

The article says that industry watchers are concerned about market saturation but it should be clear to anyone, even little kids have cellphones these days. The tablet is the growth area right now and it seems no-one can get traction against the iPad...

The big grow segment will be wearable computer and it seems the market placed the bet on Google 'cause they have the best services.

post #13 of 92
Quote:
Originally Posted by stelligent View Post

Now Samsung is also disappointing analysts and investors with record profits. Is there no end to their copying of Apple? What will they do next - issue dividends and buy back shares? Fire their software head?

It is impressive how they earned these record profits by only shipping but not selling millions of phones. Now that's innovation.

This reminds me. I hav a question that always comes to mind when the sales/shipped bunfight rears up.

Does Samsung get paid by the shops when the phones are delivered to them, or do the vendors sell the phone and give a cut to Samsung?
post #14 of 92
I have ( had)a Sammy 60 in tv with blue line down left side of screen.
6 mos old.
2 men came to house and took it off wall.
No receipt .
No card.
No nothing.
Hope they were from company.
Ml
post #15 of 92
Quote:
Originally Posted by RichL View Post

 

1) Ship phones to warehouse to collect dust

2) Harvest dust

3) ???

4) Profit

That's a brilliant business model if it works. I bet storage warehouses don't need as many solar panels as data centers.

post #16 of 92
Quote:
Originally Posted by matrix07 View Post

The big grow segment will be wearable computer and it seems the market placed the bet on Google 'cause they have the best services.

I think in 1 year or 2, big growth item will be wearables, but for now it is still the tablet. Apple has 1 year or 2 to get their wearable perfected, while they totally own tablets in the mean time.

 

Think about iPhone - it uses all the latest technology, cutting edge stuff, and still too big to wear. Wearables not ready yet...

post #17 of 92
Quote:
Originally Posted by matrix07 View Post

If it's so rosy I wonder why they want to hide it. Do you?

I don't know why/how companies report what they do, except that there is not much to gain in reporting more than what the government and regulatory bodies compel you to reveal.

 

At the end of the day, they are making billions doing what they are doing. If they are burning the phones as you seem to believe, then pass me a match.

post #18 of 92
Quote:
Originally Posted by ascii View Post

I think in 1 year or 2, big growth item will be wearables, but for now it is still the tablet. Apple has 1 year or 2 to get their wearable perfected, while they totally own tablets in the mean time.

 

Think about iPhone - it uses all the latest technology, cutting edge stuff, and still too big to wear. Wearables not ready yet...

If the phone is in my pocket, does it count as wearing?

post #19 of 92
Quote:
Originally Posted by stelligent View Post

If the phone is in my pocket, does it count as wearing?

No, it is still carrying, but don't ask me to define the difference. "You know it when you see it" :)

post #20 of 92
Quote:
Originally Posted by stelligent View Post

I don't know why/how companies report what they do, except that there is not much to gain in reporting more than what the government and regulatory bodies compel you to reveal.

 

At the end of the day, they are making billions doing what they are doing. If they are burning the phones as you seem to believe, then pass me a match.

All I'm saying is you placed the blame on the wrong horse. We'd like to compare apple to apple, not apple to orange. Fact is Samsung used to report sale number before. Fact is they stopped it once they began to compete fiercely with iPhone. Fact is they still stop reporting sale number today. So we question them. What's wrong with that? Why do you prefer to give them a pass?

Just show us the number so we can stop questioning. It's not that hard is it? What's there to hide. I don't know. You don't know. But you seem so annoyed when people have questions. Strange.

post #21 of 92
Quote:
Originally Posted by tooltalk View Post

Well, isn't Apple supposed to be "transparent"?   After all, Apple is the only company willing to share their "sales/sold" numbers with their customers.  (/s)

Making cheaper device is not in Apple's DNA?  Ever heard of iPod mini? nano, perhaps?

I think 47% quarterly profit (YoY) is pretty awesome -- that's another (sixth) consecutive quarter of record profit --, but Samsung is deservedly getting pounded for setting investors' expectation too high -- 500 million mobile devices in 2013? What were they thinking?

Neither the mini or nano are "cheap." Those items fill in another category.

Here's what I don't get, Sammy has a plethora of cheap crap phones and its profits are less than expected. How are cheap iPhones going to help Apple? I still think Apple will release a $300-400 iPhone 4ish. Anything lower will hurt Apple more than it helps.
post #22 of 92
It is not till Apple releases the large iPhone and cheap iPhone , Samsung is doomed ?
post #23 of 92
I take no cue from market analysts and their disappointment in Apple and now Samsung and their speculation on saturation. It's all just that -- speculation -- and greed.

Without information or fact or evidence, the greedy bid up the stock prices, then they make up expectations to support their stock prices so they can sell them to even greedier people.
post #24 of 92
Quote:
Originally Posted by jungmark View Post

Neither the mini or nano are "cheap." Those items fill in another category.

Here's what I don't get, Sammy has a plethora of cheap crap phones and its profits are less than expected. How are cheap iPhones going to help Apple? I still think Apple will release a $300-400 iPhone 4ish. Anything lower will hurt Apple more than it helps.

I agree.

Samsung seems to have shipped more phones this quarter but still saw their profits shrink. That probably means the phones they did ship were cheap android feature phones.

The same would happen to Apple if they release a $200 phone.

I'd rather Apple keep their margins high and release their cheaper phone for $300-400 as well.
post #25 of 92
Quote:
Originally Posted by matrix07 View Post

The big grow segment will be wearable computer and it seems the market placed the bet on Google 'cause they have the best services.

 

Too bad for "the market" that Google doesn't have a wearable product that people will want to wear.

post #26 of 92
Quote:
Originally Posted by jungmark View Post

Neither the mini or nano are "cheap." Those items fill in another category.

Here's what I don't get, Sammy has a plethora of cheap crap phones and its profits are less than expected. How are cheap iPhones going to help Apple? I still think Apple will release a $300-400 iPhone 4ish. Anything lower will hurt Apple more than it helps.
If Apple's going to do that then don't make it from cheap looking candy colored plastic. Who would spend $400 on that?
post #27 of 92
Quote:
Originally Posted by RichL View Post

 

1) Ship phones to warehouse to collect dust

2) Harvest dust

3) ???

4) Profit

Where is 'collecting underpants' in this plot?

post #28 of 92
Quote:
Originally Posted by blackbook View Post

I agree.

Samsung seems to have shipped more phones this quarter but still saw their profits shrink. That probably means the phones they did ship were cheap android feature phones.

The same would happen to Apple if they release a $200 phone.

I'd rather Apple keep their margins high and release their cheaper phone for $300-400 as well.
It's hard to release something cheaper yet keep high margins. Apple said the iPad mini had the lowest margins of any Apple device. But with the mini Apple didn't sacrifice quality for the sake of margins. I'm sorry but those candy colored plastic cases look cheap. Not something I would spend $400 or more on. I don't think Apple can play in the low end space yet still expect to get high end like margins.
post #29 of 92
Quote:
Originally Posted by ascii View Post

Quote:
Originally Posted by matrix07 View Post

The big grow segment will be wearable computer and it seems the market placed the bet on Google 'cause they have the best services.
I think in 1 year or 2, big growth item will be wearables, but for now it is still the tablet. Apple has 1 year or 2 to get their wearable perfected, while they totally own tablets in the mean time.

Think about iPhone - it uses all the latest technology, cutting edge stuff, and still too big to wear. Wearables not ready yet...

You are correct -- If you consider a wearable device as an all-in-one replacement for an iPhone...

But all the wearable device [really] needs to do is conveniently provide voice/audible I/O and Control to a companion iOS device such as an iPad Mini, iPad or iPhone -- elsewhere on your person or in your kit.

When on the go, I currently take an iPhone 5 and an iPad 4.

I would prefer a wearable device and an iPad Mini.
  • If I need to make or receive a phone call (seldom) I would just interface the wearable iDevice... the iPad Mini would stay where it is (lap, holster, backpack. etc.)
  • If I need to augment the phone call (FaceTime, Maps, etc.) or text I would use the iPad Mini.
  • For most non-phone uses I would use the iPad Mini.
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post #30 of 92
Quote:
Originally Posted by stelligent View Post

Quote:
Originally Posted by ascii View Post

I think in 1 year or 2, big growth item will be wearables, but for now it is still the tablet. Apple has 1 year or 2 to get their wearable perfected, while they totally own tablets in the mean time.

Think about iPhone - it uses all the latest technology, cutting edge stuff, and still too big to wear. Wearables not ready yet...
If the phone is in my pocket, does it count as wearing?

I think, at most, the iPhone in your pocket counts as wearing -- if you can use it while "wearing it in your pocket"!
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post #31 of 92
Quote:
Originally Posted by Rogifan View Post

If Apple's going to do that then don't make it from cheap looking candy colored plastic. Who would spend $400 on that?

I agree. No cheap looking plastic.
post #32 of 92
Quote:
Originally Posted by zoffdino View Post

The iPhone accounts for half of Apple sales, but likely more than half of Apple's profit as it's the product with highest margin. Whether it approaches 70% is a question that only Apple management knows.

The high end smart phone market is quickly reaching saturation. Those in the developed world who can afford it already had one. The growth will be in the low and mid-end tiers, which Apple is sorely lacking. I don't think Apple will ever chase the cheap crowd, it's not their DNA. But the mid-tier phones, those that cost $300 - $400, have a huge market that Apple so far is leaving to the Android vendors.

 

You misunderstanding the phone market, the iPhone is very far from being a very high margin product.  Too much patent and licence fee are attached to any cell phone technology.  Apple like everyone else has to pay big bucks for its 3G-LTE modem and other technologies integrated in phones these day, this is why carriers started to subsidize devices to their clients unwilling to pay the real price of it. 

 

The real cash cow for Apple is not their products anymore but their services, the iTunes Stores and the whole iOS ecosystem is where Apple got their money from. 

post #33 of 92
Quote:
Originally Posted by Rogifan View Post

If Apple's going to do that then don't make it from cheap looking candy colored plastic. Who would spend $400 on that?

Agreed.

The should use candy colored
aluminum and maybe just put a small plastic panel on the bottom of the back like the iPhone 1 had.

Quote:
Originally Posted by Rogifan View Post

It's hard to release something cheaper yet keep high margins. Apple said the iPad mini had the lowest margins of any Apple device. But with the mini Apple didn't sacrifice quality for the sake of margins. I'm sorry but those candy colored plastic cases look cheap. Not something I would spend $400 or more on. I don't think Apple can play in the low end space yet still expect to get high end like margins.

I think they should maintain higher margins on the phone because if the cheaper iPhone cannibalizes the more expensive just a little bit than that would throw off Apple's quarterly margins completely.

Quote:
Originally Posted by jungmark View Post

I agree. No cheap looking plastic.

I still believe the leaks are fake. We will not be seeing that plastic on the cheaper iPhone.
post #34 of 92

"Though Samsung Electronics reported a record operating profit for its June quarter, the number still came in below analysts' expectations, sending the company's stock tumbling on Friday."

 

Just like Apple. But will we start seeing tech blogs lamenting that Samsung has lost its mojo? Will we see articles instructing Samsung as to what it must do to survive? Will a chorus of wagging tongues start demanding that Samsung's CEO be replaced? Will the term"beleaguered" start to be used when referring to Samsung? Will there be cries of "no innovation" flying around? 

 

I think we already know the answers to those questions don't we.

post #35 of 92
Quote:
Originally Posted by waldobushman View Post

I take no cue from market analysts and their disappointment in Apple and now Samsung and their speculation on saturation. It's all just that -- speculation -- and greed.

Without information or fact or evidence, the greedy bid up the stock prices, then they make up expectations to support their stock prices so they can sell them to even greedier people.

Investors are indeed a fickle lot. Two companies bashed for record profits. Par for the course I guess.
post #36 of 92
Quote:
Originally Posted by zoffdino View Post

The iPhone accounts for half of Apple sales, but likely more than half of Apple's profit as it's the product with highest margin. Whether it approaches 70% is a question that only Apple management knows.

The high end smart phone market is quickly reaching saturation. Those in the developed world who can afford it already had one. The growth will be in the low and mid-end tiers, which Apple is sorely lacking. I don't think Apple will ever chase the cheap crowd, it's not their DNA. But the mid-tier phones, those that cost $300 - $400, have a huge market that Apple so far is leaving to the Android vendors.

Apple has several problems to deal with.

 

1.  They don't have NTT and China Mobile signed up yet.  Obviously, they are both holding out as they and Apple go through their respective negotiations.  I'm sure Apple will sign both of them up at some point in time, which would definitely increase Apple's market share on a global level and Apple will see increased sales and revenues from the iPhone product line based on these two.

 

2.  Apple has only announced basically one new model on a yearly basis, when they should be announcing more than that.  I think Apple has room to replace their existing iPhone 4 and 4S with an updated model that is their "low end" model which maybe Apple is planning on doing.  The other is getting a bigger screen phone, which is seriously hampering their growth.  I personally think that the market is definitely split up into three definite screen sizes and Apple needs to constantly address this.

 

3.  There is obviously a market for the low end smartphone market that Samsung seems to have capitalized on where the unlocked version is $150 retail, $99 on sale but there is no money in that, Apple most likely is not stupid enough to make a phone that sells tens of millions and basically makes hardly anything from them due to factoring the costs of warranty issues and support calls in supporting a super low end product.  It's similar to the PC industry selling $400 laptops.  THERE IS NO MONEY IN IT, SO WHY BOTHER.  It's a cheap way of buying market share.

 

4. iOS obviously needs an fresh update, which it could have used last year, but obviously we have to wait until iOS 7 is finished, but so far, I personally like what I see and know that iOS 8 will just add even more features.

 

5.  I don't know how much pent up demand Apple has for their fingerprint ID technology to get released.  Individuals may not care as much as large customers, government, and military customers might be salivating for this technology in smartphones and tablets.  So, this is something we have to wait to see how much impact that's happening.

 

On one hand, it's easy for the analysts to paint whatever picture they want with Apple and they are so far going by what has been officially announced.  Sometimes Apple keeping things secretive can have a positive and negative impact on people's perception. But, i feel pretty good that Apple will have some interesting product announcements this year.  Its just a matter of will they have a nice large screen iPhone or not.  Will they have fingerprint ID technology this year or not.  Will they get Apple TV upgraded to make a significant impact on their sales/profits.  Will Apple actually release an actual smart TV or not.  Will Apple release an iWatch and what will that do to impact revenues/profits.  Obviously, Apple will release new MacBookPros, iMacs, Mac Minis and MacPros, so will see if the desktop/laptop sales gets back to increasing sales, etc.  I just only have a certain degree of caution in them having production issues this year like they did last year when they announced a lot of products within a short period of time.

post #37 of 92
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post #38 of 92
Quote:
Originally Posted by lkrupp View Post

"Though Samsung Electronics reported a record operating profit for its June quarter, the number still came in below analysts' expectations, sending the company's stock tumbling on Friday."

 

Just like Apple. But will we start seeing tech blogs lamenting that Samsung has lost its mojo? Will we see articles instructing Samsung as to what it must do to survive? Will a chorus of wagging tongues start demanding that Samsung's CEO be replaced? Will the term"beleaguered" start to be used when referring to Samsung? Will there be cries of "no innovation" flying around? 

 

I think we already know the answers to those questions don't we.

I think Samsung is kind of dumb to announce their biggest profit maker right before the summer months.  People tend to not buy products during the summer since a lot of people are saving up for summer vacations and people are mentally in a different head space during the summer months.  Technology stocks have always had their slow period during the summer months. That's been going on for many decades.

post #39 of 92
Quote:
Originally Posted by stelligent View Post

Then what's the point of mentioning anything. Why is it interesting to share what you are not concerned about?

You might have written "not currently drinking champagne".

But I am drinking champaign.
"Interesting" is in the eye of the beholder. So you tell me: why did you find my posting interesting enough to reply?

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post #40 of 92
Quote:
Originally Posted by drblank View Post

I think Samsung is kind of dumb to announce their biggest profit maker right before the summer months.  People tend to not buy products during the summer since a lot of people are saving up for summer vacations and people are mentally in a different head space during the summer months.  Technology stocks have always had their slow period during the summer months. That's been going on for many decades.

 

I think they try to release it when it won't have to compete with a new iPhone, toward the end of the cycle for the last one.

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