Samsung earnings disappoint amidst concerns of slowing smartphone growth

Posted:
in General Discussion edited January 2014
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.
«1345

Comments

  • Reply 1 of 91
    zoffdinozoffdino Posts: 192member
    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.
  • Reply 2 of 91
    MacProMacPro Posts: 18,155member
    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? :D
  • Reply 3 of 91
    stelligentstelligent Posts: 2,680member

    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?

  • Reply 4 of 91
    suddenly newtonsuddenly newton Posts: 13,740member
    Of no particular concern.
  • Reply 5 of 91
    stelligentstelligent Posts: 2,680member


    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.

  • Reply 6 of 91
    stelligentstelligent Posts: 2,680member

    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".

  • Reply 7 of 91
    tooltalktooltalk Posts: 766member

    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?

  • Reply 8 of 91
    matrix07matrix07 Posts: 1,993member

    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?


  • Reply 9 of 91
    asciiascii Posts: 5,941member


    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...

  • Reply 10 of 91
    richlrichl Posts: 2,213member

    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

  • Reply 11 of 91
    matrix07matrix07 Posts: 1,993member

    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.


  • Reply 12 of 91
    rayzrayz Posts: 814member
    stelligent wrote: »
    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?
  • Reply 13 of 91
    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
  • Reply 14 of 91
    stelligentstelligent Posts: 2,680member

    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.

  • Reply 15 of 91
    asciiascii Posts: 5,941member

    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...

  • Reply 16 of 91
    stelligentstelligent Posts: 2,680member

    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.

  • Reply 17 of 91
    stelligentstelligent Posts: 2,680member

    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?

  • Reply 18 of 91
    asciiascii Posts: 5,941member

    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" :)

  • Reply 19 of 91
    matrix07matrix07 Posts: 1,993member

    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.


  • Reply 20 of 91
    jungmarkjungmark Posts: 6,664member
    tooltalk wrote: »
    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.
Sign In or Register to comment.