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Samsung predicts massive profit decline, blames slumping smartphone sales

post #1 of 175
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South Korean electronics giant Samsung on Tuesday warned investors that it is set to announce a quarterly profit decline of as much as 26 percent year-over-year, citing weak smartphone demand and increased competition in China and Europe as the shortfall's primary drivers.

Purported photos of Samsung's new Galaxy F
Purported photos of Samsung's new Galaxy F "premium" smartphone


The company expects to have added between 7 trillion and 7.4 trillion Won ($6.9 billion to $7.3 billion) to its coffers in the second quarter, compared with 9.5 trillion Won one year ago. It will mark Samsung's third consecutive quarter of sliding profits.

Along with the relative strength of the Won against other world currencies, Samsung specifically cited trouble in its IT and mobile communications division -- the unit that handles the company's handset and tablet business -- as the culprit.

Samsung was forced to spend "somewhat aggressively" on marketing in order to clear backed-up inventory of mid-tier and low-end devices as it feels the squeeze from commodity Android vendors. That position is not likely to improve in the near future, especially as new initiatives like Google's Android One program expand the availability of ultra-low-cost Android devices with more than modest technical specifications.

There is worry among industry watchers that Samsung's flagship devices -- including the new Galaxy S5 -- could be suffering from similar channel-stuffing issues, according to the Wall Street Journal. Combined with Samsung's assertion that demand for its 5-inch and 6-inch devices cannibalized tablet sales, the numbers paint a bleak picture of the company's future ahead of arch rival Apple's hotly-anticipated release of competing 4.7-inch and 5.5-inch next-generation iPhones this fall.

The handset division's troubles also dragged other Samsung business units down, the company said. Samsung's System LSI and display businesses -- which supply both Samsung and rivals, including Apple, with system components -- saw profits fall amid lowered shipments.
post #2 of 175
IIRC they offered a similar warning about three weeks ago. What a shame. /s
melior diabolus quem scies
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melior diabolus quem scies
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post #3 of 175

Their dishonesty in marketing is NOT helping them.

post #4 of 175
I wouldn't worry about Samsung. As soon as Apple releases "The Next Big Thing," Samsung will have something new to copy.
post #5 of 175
Haha

Still profiting decent numbers. And if I'm not mistaken, only the chips are now purchased from Samsung- with all screens coming from other places. Let's hope the A8 is the year of no samsung to hurt them even further.

As an aside- do we now know why Apple never got into the dirt-cheap market? Because there's no money in it, and plenty of backlog. How does Apple get rid of existing inventory? Keeps it's phone around for 3 years while dropping the price- and not even having to advertise. So supply lines do play a major role. The key to being a CEO or any business owner for that matter is to put people in the right positions to succeed.

Cook is the right man for the job. No doubt.

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2012 27" iMac i7, 2010 27" iMac i7, 2011 Mac Mini i5
iPad Air, iPad Mini Retina, (2) iPhone 5S, iPod Touch 5
Time Capsule 5, (3) AirPort Express 2, (2) Apple TV 3

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post #6 of 175
People are realizing that Scamscum doesn't build quality products. Shocker.
post #7 of 175

Hilarious that Samsung is blaming the mid and low end phones for their profit decline.  They never made much money on those phones.

 

Where they are truly hurting is the top end.  The Galaxy S5 has been an utter disaster.  They are selling 25% less S5's than S4's even with massive discounts and buy one get one free offers.  But Samsung will not say this.  Its so much easier to justify losing the low end due to price rather than the high end because of lack of innovation.

post #8 of 175
Oooo, that's so unfair! Seems copying really isn't a viable alternative to innovation. Who knew? Answer: Apple.

Daniel Swanson

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Daniel Swanson

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post #9 of 175
Quote:
Originally Posted by sog35 View PostThe Galaxy S5 has been an utter disaster.  They are selling 25% less S5's than S4's even with massive discounts and buy one get one free offers.  .

 

I knew something was up when the phone launched with BOGO offers. That's not something you do if you expect it to sell well.

post #10 of 175
Over on Quartz, the site is working extraordinarily hard to portray Samsung's profit decline as an omen for Apple. This tactic has been pursued before as Samsung purposely lied about great sales when it knew it was channel stuffing. Even when the truth is revealed about Samsung's lies, people are still trying to find ways to spin the lies.

Quartz ended its article with a section titled, "On the bright side..." The section was about the $36 million theft of Samsung products and the employees held hostage. Is that really a bright side?
post #11 of 175
Quote:
Originally Posted by TheWhiteFalcon View Post

I knew something was up when the phone launched with BOGO offers. That's not something you do if you expect it to sell well.

I read Samsung was stating the S5 was its fastest selling smartphone ever. I will get article's link then post it here. No publication is questioning the lies. They are just accepting the lies.
post #12 of 175
Marketing scams don t work
You can fool the people.......
Samsung plastic mess has finger scan that doesn't work
I don't care how much you spend on marketing
A pig I a tuxedo is still a pig
Now the bottom feeders have figured out samscum strategy
Gee crash in profits well good I hope their stock price falls triple what value they
STOLE from apple
Dyson should also be laughing

A discussion at lunch by someone saying how much apple has let him down he is breaking free and going to samscum s5

I told him their flagship product is so wonderful samscum fired its designer
So embrace that technology FAILURE

He was silent And others in the room chuckled

Hey what's the return policy
I APPLE THEREFORE I AM
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I APPLE THEREFORE I AM
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post #13 of 175
And yet their stock is up
post #14 of 175

Bahahahahahaha!!!!

 

The next big company is already here...Apple! 

post #15 of 175
Quote:
Originally Posted by leavingthebigG View Post


I read Samsung was stating the S5 was its fastest selling smartphone ever. I will get article's link then post it here. No publication is questioning the lies. They are just accepting the lies.

 

Fasting selling the first few weeks.....when they were channel stuffing. 

Now that vendors are refusing to take additional shipments because the original shipments have not sold yet the real numbers are coming out AKA June Qtr financials.

 

The media is totally ignoring this story.

Most in the know are estimating S5 sales are 20-25% below the S4.  Which was about flat to the S3. 

 

One of the few media sites that are spilling the beans are saying they only sold 11 million S5 in its first quarter of release.

http://www.theinquirer.net/inquirer/news/2352262/samsung-warns-of-poor-q2-due-to-slowing-galaxy-s5-sales

post #16 of 175
Quote:
Originally Posted by TheWhiteFalcon View Post
 

 

I knew something was up when the phone launched with BOGO offers. That's not something you do if you expect it to sell well.

 

Verizon had BOGO offers for pre-orders on the S5...

 

http://www.androidpolice.com/2014/04/04/verizons-galaxy-s5-pre-order-is-now-available-249-99-with-a-two-year-contract-bogo-offer-included/

post #17 of 175
I have to think the top level management at Samsung are taking a long hard look at their smart phone division's almost insane desire to beat Apple at all costs. Flooding the market with very low profit products is hurting the whole company. I seriously suspect some heads may roll in the phone division over this and they may scale back the desire to 'win' the numbers game (AKA chanel stuffing, discounts, give awaits and so on) and go back to looking at how to actually make money, even if that means conceding that Apple is actually selling more profitable products by far.
Been using Apple since Apple ][ - Long on AAPL so biased
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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 #18 of 175
I guess copying Apple can only get you so far...
post #19 of 175
There are likely a LOT of folks waiting to see what apple is coming up with before buying anything further.
post #20 of 175

"The next worst thing"™

post #21 of 175
Quote:
Originally Posted by blazar View Post

There are likely a LOT of folks waiting to see what apple is coming up with before buying anything further.


Agreed. It's pretty widely known that the iPhone 6 will have some large screen options, and that's the reason many Samsung owners bought their phones anyway. Give them a choice to get a modern, fresh OS, amazing hardware crafted by Ive & Co, and a large screen? They'll be lining up around the globe.

post #22 of 175

Now that mid-to-low end Android phones are "good enough" for most customers, high end Android phones are a harder sell. They're getting squeezed from the low end by commodity device makers and suffering from their own channel stuffing practices.

 

They're also getting squeezed from the high end by Apple. After two generations of very little compelling new technology in their phones, more of their remaining high end customers are looking to Apple. We're seeing that copying and big screens can only take you so far. At some point, you actually have to innovate. Once the next iPhone launches with a bigger screen and a more extensible iOS 8, a lot of those customers' objections to the iPhone will disappear and they'll bring their dollars with them.

post #23 of 175
I don't care if their profits are dropping as long as they have the money to pay off their patent losses to Apple.
post #24 of 175
Cheapo phones from Xiaomi will continue to erode Samsung's base.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #25 of 175
All that money they spent on stuffing the channel and advertising and yet they're couldn't buy brand loyalty. 1biggrin.gif
post #26 of 175
Quote:
Originally Posted by bobbyfozz View Post

Their dishonesty in marketing is NOT helping them.

Would you care to be a bit more specific? Vague rants don't add much to the discussion

It's interesting to see how this seems to vindicate Apple staying out of the lower end of the market - too easy to compete there when people care more about price than name or features.
post #27 of 175
Quote:
Originally Posted by sog35 View Post

Hilarious that Samsung is blaming the mid and low end phones for their profit decline.  They never made much money on those phones.

Where they are truly hurting is the top end.  The Galaxy S5 has been an utter disaster.  They are selling 25% less S5's than S4's even with massive discounts and buy one get one free offers.  But Samsung will not say this.  Its so much easier to justify losing the low end due to price rather than the high end because of lack of innovation.
I suspect that's why there are rumors Samsung is going to launch a "premium" version of the S5 with a non-plastic case around the launch of the next iPhone. I see that as nothing more than desperation. USA Today ran an article about how the next version of Galaxy phones can't come soon enough. But the current version was released only a couple months ago. Talk about a flop!
post #28 of 175
Quote:
Originally Posted by DaveN View Post

I don't care if their profits are dropping as long as they have the money to pay off their patent losses to Apple.

You know I was thinking, it was probably part of Apple Strategy to keep buying part from them so when they won their cases and Samsung maybe refuse to pay they just offset what Apple may have owed them for what Samsung owed them from their lost cases. this is standard practices between company when things like this happen. Also Apple maybe able to do that now that they have alternate sources for all their parts which they were buying from Samsung. They could take the $1B create and if Samsung refused to ship they new part they say find we will buy them elsewhere. This is the loose/loose situation for Samsung due to the fact they would not get paid, thus earning will such, and if apple pulled the business it will take them 12 to 18 months to try an make up the lost Apple business. Apple is now in the power position in this situation.

post #29 of 175
Samsung is really screwed because Apple hasn't even released the new iPhone yet. Samsung has played most of its cards, Apple hasn't.
post #30 of 175

But according to tech analyst Samsung is winning the cellular phone wars after all business thrive on market share and unicorn dander. All of these old stodgy things like profits and net income are highly over-rated. At least they are as long as Apple is the clear leader in those areas.

post #31 of 175
Quote:
Originally Posted by digitalclips View Post

I have to think the top level management at Samsung are taking a long hard look at their smart phone division's almost insane desire to beat Apple at all costs. Flooding the market with very low profit products is hurting the whole company. I seriously suspect some heads may roll in the phone division over this and they may scale back the desire to 'win' the numbers game (AKA chanel stuffing, discounts, give awaits and so on) and go back to looking at how to actually make money, even if that means conceding that Apple is actually selling more profitable products by far.

Indeed! Can anyone find the story from over a year ago where the head guy at Samsung went on a long vacation (which he usually does only when about to make major shake ups)...he came back saying something about their phone division being a drain on the company...

Excuse me, I'm off to hunt down that story. I know I remember reading it. Was surprised the phones didn't get axed back then. Maybe there was desperate pleading that gave them more time. Now, I would not be at all surprised to see Sammy take drastic action.
What is really factored into the price is a kind of perpetual sense of disbelief that any company could be as good as Apple is. ~Retrogusto
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What is really factored into the price is a kind of perpetual sense of disbelief that any company could be as good as Apple is. ~Retrogusto
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post #32 of 175
Quote:
Originally Posted by Fred1 View Post


Would you care to be a bit more specific? Vague rants don't add much to the discussion

It's interesting to see how this seems to vindicate Apple staying out of the lower end of the market - too easy to compete there when people care more about price than name or features.


I can be. Because of Samsung's shady dealings with Apple and their offensive marketing in the cellphone arena I actively avoided buying their televisions for my last two television purchases. Samsung's mobile division's marketing strategy has an impact on the company as a whole beyond simply losing profits in the mobile market.

post #33 of 175

Translation = We've run out of ideas to steal.

post #34 of 175

I'm…devastated...

I may wear black for, oh, about a minute.

It seems odd that they are blaming diminished interest in smartphones,

although I confess I'm less interested than ever in their 'smart'phones.

post #35 of 175
1. Samsung is being out marketed and outsold at the low end of the market by Chinese companies who love to copycat Samsung's products.

2. Samsung's large smartphones are cannibalizing sales of Samsung's tablets.

3. Samsung's flagship S5 is being outsold by the iPhone 5c in the United States, even more outsold by the iPhone 5s.

4. Google is making it easier to make Samsung clones. Google doesn't care about Samsung profits. It only cares about the number of ads it an show.

5. Samsung has nothing of Apple to copy - yet - leaving it with failure after design failure.

6. Samsung's sales have gone down so much it is hurting its own component factories - like the ones making screens for smartphones.

Poor Copyist Samsung. Poor kitty.
post #36 of 175
Quote:
Originally Posted by Rogifan View Post


I suspect that's why there are rumors Samsung is going to launch a "premium" version of the S5 with a non-plastic case around the launch of the next iPhone.

 

Same crap as before, now with a tacky brushed aluminum shell hiding the cheap plastic within. That, plus tons of pixels invisible to the human eye, in all their oversaturated AMOLED glory.

 

post #37 of 175
Quote:
Originally Posted by sog35 View Post
 
Quote:
Originally Posted by leavingthebigG View Post


I read Samsung was stating the S5 was its fastest selling smartphone ever. I will get article's link then post it here. No publication is questioning the lies. They are just accepting the lies.

 

Fasting selling the first few weeks.....when they were channel stuffing. 

Now that vendors are refusing to take additional shipments because the original shipments have not sold yet the real numbers are coming out AKA June Qtr financials.

 

The media is totally ignoring this story.

Most in the know are estimating S5 sales are 20-25% below the S4.  Which was about flat to the S3. 

 

One of the few media sites that are spilling the beans are saying they only sold 11 million S5 in its first quarter of release.

http://www.theinquirer.net/inquirer/news/2352262/samsung-warns-of-poor-q2-due-to-slowing-galaxy-s5-sales

Uh, no, it says that a Korean analyst firm dropped its quarterly projection for Samsung sales by 11 million - from 88m to 77m….

It's really okay to actually read your own posted links!;)

post #38 of 175
It's kinda freaky when I think about it. Just last year, I was having a discussion at Cnet, and this guy accurately predicted (in hindsight) that moving forward, Google would become more closed, Apple would fall in market share but actually become more profitable, while Samsung would increase in market share but drop in profits.

It makes sense now that I think about it. Samsung simply grew too large too soon. They insisted on releasing so many models so quickly even though technology itself doesn't improve that quickly. That's why you get gimmicks like a heart-rate monitor that sports just a 50% accuracy rate (unacceptable for what is being touted as a medical / health feature). It's like that runner who decided to sprint right at the start of a long marathon just to wow the crowd. Now Samsung is starting to run out of steam and ideas, and at a bad time too. Apple is expected to release two larger iPhone models and iOS 8 is shaping up to be a major release in terms of features and functionality.

Samsung - don't blame anyone. You are simply reaping what you have sown.
post #39 of 175
Quote:
Originally Posted by mostcallmerob View Post
 

You guys speak of innovation and Apple, but honestly, what innovation have they supplied to the smartphone market? They keep making their phones slimmer, upgrading internals with better chips, increasing screen resolution, and now following Samsung, they are finally increasing their screen size to something respectable. You think that innovation is slimming down and making a screen bigger, big whoop. 

Touch ID, just introduced in Apple's latest iPhone, is an amazing example of groundbreaking innovation: the very first highly reliable and incredibly convenient biometric security system ever installed on a mobile device.  Oh, and I forgot to mention the first 64-bit processor on a mobile phone.  As Phil Schiller would say, "Can't innovate? My Ass!"

post #40 of 175
Quote:
Originally Posted by mostcallmerob View Post
 

You guys speak of innovation and Apple, but honestly, what innovation have they supplied to the smartphone market? They keep making their phones slimmer, upgrading internals with better chips, increasing screen resolution, and now following Samsung, they are finally increasing their screen size to something respectable. You think that innovation is slimming down and making a screen bigger, big whoop. 

 

Welcome back, mostcallmerob. Here for your quarterly pro-Android/anti-Apple rant?

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