Samsung profit dips as feature phone, tablet sales slide

Posted:
in General Discussion edited May 2015
South Korean electronics conglomerate Samsung has taken a sizable year-over-year profitability hit in its mobile phone division, with declining sales of high-volume, low-cost feature phones and tablets dragging down its bottom line.




Operating profit for Samsung's mobile business was just 2.74 trillion won ($2.6 billion), the company reported on Wednesday. That represents a steep decline from the 6.4 trillion won operating profit that segment posted in the year-ago quarter.

Partly to blame for the drop was a fall in the average selling price of Samsung's smartphones, as sales of mid-tier options like the Galaxy A improved, taking customers that may otherwise have chosen one of the flagship Galaxy S handsets.

Despite the grisly year-over-year numbers, Samsung's mobile business appears to be on the rebound after a rough 2014. Operating profit reached an all-time low last year, and the first-quarter numbers are actually up from the fourth quarter of 2014 thanks in part to the launch of the Galaxy S6 and S6 Edge.

Those new devices helped Samsung recapture the title of world's largest smartphone maker from Apple during the March quarter. Samsung shipped 83.2 million smartphones in that period, compared to 61.2 million for Apple.
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Comments

  • Reply 1 of 38
    gatorguygatorguy Posts: 19,818member
    As Chinese buyers have gotten richer in general they're less attracted to the lower-cost phones. That segment is taking a hit there even with the Chinese manufacturers like Xiaomi Lenovo and ZTE, with Apple the beneficiary. China by itself accounts for the bulk of the lost revenue IMO.

    Doing business there is obviously a two-edged sword but since it has turned into the largest market, even out-performing the US, it's nigh-impossible to ignore.
  • Reply 2 of 38
    The chaebol lives to fight another day.
  • Reply 3 of 38
    xixoxixo Posts: 417member
    nobody saw that coming....
  • Reply 4 of 38
    adrayvenadrayven Posts: 460member
    Mass volume -/= success

    Most of those sales were cheep feature phones.. This article makes it sound like most of those sales were S6 and Edge phones.. they were hardly a fraction of at 84 million.. most of it's sales were the Galaxy A series, that they practically give away.
  • Reply 5 of 38
    gatorguygatorguy Posts: 19,818member
    sog35 wrote: »
    Total BS.  

    Samsung's profits are not down because of less feature phone/tablet sales.

    They are getting smashed because they are selling less PREMIUM PHONES.
    Market researchers would disagree with you.

    "The combined market share of Chinese brands fell to a two year low on a global basis, as growth in China slowed to single digit in the first quarter of 2015.

    Apple increased its market share in China, extending its lead over its Chinese rivals Xiaomi and Huawei. Major local vendors face the strongest headwinds in their home market since the smart phone boom began in 2011. Lenovo (including Motorola), Yulong and ZTE recorded their lowest shipment volume to the Chinese market for the last two years. “Consumers are losing their appetite for ultra-low-cost devices, as expectations increase in line with spending power and, combined with rising market saturation, this is resulting in a major shift to devices that provide better user experience,”
  • Reply 6 of 38
    adrayvenadrayven Posts: 460member
    Quote:
    Originally Posted by sog35 View Post

     

    Total BS.  

     

    Samsung's profits are not down because of less feature phone/tablet sales.

     

    They are getting smashed because they are selling less PREMIUM PHONES.




    Exactly.. this article got it completely backwards. lol

     

    Journalism is dead.. long live quick, unverified and non-proofread blogging! 

  • Reply 7 of 38
    adrayvenadrayven Posts: 460member
    Quote:
    Originally Posted by Gatorguy View Post





    Market researchers would disagree with you.



    No they would not.. they said EXACTLY what Sog just said.. If you ACTUALLY listen to the call, you'd hear Samsung whining they were not selling many S6's yet because of supply issues! IE, THEY HAVE NOT SOLD MANY!

  • Reply 8 of 38
    SpamSandwichSpamSandwich Posts: 30,581member
    The chaebol lives to fight another day.

    Lost Star Trek episode: The Trouble with Chaebols
  • Reply 9 of 38
    maestro64maestro64 Posts: 4,424member
    S6 sales did not help their numbers since they did not ship until April that is a mistake in the article. Their number is up is due to more sales if we believe IDC claims. Their profit could be up for other reasons but no one will know since they do not provide any details.
  • Reply 10 of 38
    jungmarkjungmark Posts: 6,634member
    gatorguy wrote: »
    As Chinese buyers have gotten richer in general they're less attracted to the lower-cost phones. That segment is taking a hit there even with the Chinese manufacturers like Xiaomi Lenovo and ZTE, with Apple the beneficiary. China by itself accounts for the bulk of the lost revenue IMO.

    Doing business there is obviously a two-edged sword but since it has turned into the largest market, even out-performing the US, it's nigh-impossible to ignore.

    Yup. That's why analysts don't understand Apple. Apple is skating to where the puck will be and not skating to where the puck is currently.
  • Reply 11 of 38
    Quote:
    Originally Posted by Adrayven View Post



    Exactly.. this article got it completely backwards. lol

     

    Journalism is dead.. long live quick, unverified and non-proofread blogging! 


     

    This article mirrors Samsung's own analysis, which reads: 

     

    Quote:

    Smartphone sales increased QOQ. However, tablet and feature phone sales decreased, along with a decreased ASP, resulting in a slight decrease in revenue. Meanwhile, earnings improved due to more efficient management of marketing expenditures, expanded sales of middle-end smartphones including the Galaxy A Series, and a strengthened premium lineup following the introduction of the Galaxy S6 and S6 edge. 


     

    Ref: http://global.samsungtomorrow.com/samsung-electronics-announces-first-quarter-results-2/

  • Reply 12 of 38

    Those new devices helped Samsung recapture the title of world's largest smartphone maker from Apple during the March quarter. Samsung shipped 83.2 million smartphones in that period, compared to 61.2 million for Apple.

     

    These two sentences have been blindly published as fact by many Web sites. For the Web sites I visit regularly, only Patently Apple has questioned the numbers. AI has repeated the sentences and sadly will continue to repeat the numbers as fact instead of as, "According to Strategy Analytics...".

     

    Here is something else... When Strategy Analytics published mobile phone data for China, it published numbers for Xiaomi, Apple and Huawei. For some unexplained reason Samsung was ranked at number four without a smartphone number.

     

    Why would Strategy Analytics publish numbers for the leading three companies in China, but choose to not publish any number for Samsung?

     

    Because Strategy Analytics is choosing to publish numbers for other companies while choosing to not publish numbers for Samsung, can Strategy Analytics be trusted to be telling the truth about the 83.2 million worldwide number? :no:

  • Reply 13 of 38
    calicali Posts: 3,495member
    Samsung shipped 83.2 million smartphones in that period, compared to 61.2 million for Apple.

    Anyone notice what's wrong with this sentence?
  • Reply 14 of 38
    Quote:
    Originally Posted by leavingthebigG View Post

     

    Those new devices helped Samsung recapture the title of world's largest smartphone maker from Apple during the March quarter. Samsung shipped 83.2 million smartphones in that period, compared to 61.2 million for Apple.

     

    These two sentences have been blindly published as fact by many Web sites. For the Web sites I visit regularly, only Patently Apple has questioned the numbers. AI has repeated the sentences and sadly will continue to repeat the numbers as fact instead of as, "According to Strategy Analytics...".

     

    Here is something else... When Strategy Analytics published mobile phone data for China, it published numbers for Xiaomi, Apple and Huawei. For some unexplained reason Samsung was ranked at number four without a smartphone number.

     

    Why would Strategy Analytics publish numbers for the leading three companies in China, but choose to not publish any number for Samsung?

     

    Because Strategy Analytics is choosing to publish numbers for other companies while choosing to not publish numbers for Samsung, can Strategy Analytics be trusted to be telling the truth about the 83.2 million worldwide number? :no:




    It would be shocking to discover that Samsung didn't sell more smartphones than Apple, because Samsung competes in many additional markets that Apple does not. The cheapest iPhone you can buy new without a contract costs around $500; the cheapest Samsung smartphone you can buy new without a contract is about $75. 

     

    I don't understand why people are so worried about how many phones Apple sells vs. Samsung. Apple doesn't need to "beat" samsung, there's plenty of room in the market for 2 major powers.

  • Reply 15 of 38
    Quote:

    Originally Posted by BobJohnson View Post

     

     

    This article mirrors Samsung's own analysis, which reads: 

     

     

    Ref: http://global.samsungtomorrow.com/samsung-electronics-announces-first-quarter-results-2/


     

    Thanks for the link.



    It is funny how samsung is trying to define three smartphone segments in their wording from your linked article:  "The Mobile Business also saw profit growth, due to increased sales of new middle- to low-end smartphones, all the while decreasing marketing expenditures."  WTF is a low end smartphone, one with a screen?

  • Reply 16 of 38
    Quote:

    Originally Posted by AppleInsider View Post



    South Korean electronics conglomerate Samsung has taken a sizable year-over-year profitability hit in its mobile phone division, with declining sales of high-volume, low-cost feature phones and tablets dragging down its bottom line.

     





    Operating profit for Samsung's mobile business was just 2.74 trillion won ($2.6 billion), the company reported on Wednesday. That represents a steep decline from the 6.4 trillion won operating profit that segment posted in the year-ago quarter.



    Partly to blame for the drop was a fall in the average selling price of Samsung's smartphones, as sales of mid-tier options like the Galaxy A improved, taking customers that may otherwise have chosen one of the flagship Galaxy S handsets.



    Despite the grisly year-over-year numbers, Samsung's mobile business appears to be on the rebound after a rough 2014. Operating profit reached an all-time low last year, and the first-quarter numbers are actually up from the fourth quarter of 2014 thanks in part to the launch of the Galaxy S6 and S6 Edge.



    Those new devices helped Samsung recapture the title of world's largest smartphone maker from Apple during the March quarter. Samsung shipped 83.2 million smartphones in that period, compared to 61.2 million for Apple.

     

    I noticed they are using a delta symbol for their CE operating profits, so this means they dropped 0.14 from previous actual quarter of 0.18, which means this block should read 0.04.  If u quickly skip over this fact while reading, then u think they did not so bad from last quarter, but if u properly read it for what it was, a loss, we then begin to understand their deception first hand.

  • Reply 17 of 38
    MacProMacPro Posts: 17,905member
    sog35 wrote: »
    Samsung makes ZERO on feature phones.  So how the HELL does low feature phone sales = 40% less profits?

    They just dont want to admit that Apple is destroying Samsung.

    Neither does gatorguy. :D
  • Reply 18 of 38
    gilly33gilly33 Posts: 219member
    Don't know why we make these comparisons anyways. Samsung shipped 83 million + smartphones how much of those are real sales. Competition is good but so called research experts depending on their bias throw all these numbers out there. And someone can correct me, I'd like to see actual sales numbers or did I miss something.
  • Reply 19 of 38
    MacProMacPro Posts: 17,905member
    Time they changed their name to Dipsung.
  • Reply 20 of 38
    Quote:
    Originally Posted by AppleInsider View Post



    South Korean electronics conglomerate Samsung has taken a sizable year-over-year profitability hit in its mobile phone division, with declining sales of high-volume, low-cost feature phones and tablets dragging down its bottom line.

     





    Operating profit for Samsung's mobile business was just 2.74 trillion won ($2.6 billion), the company reported on Wednesday. That represents a steep decline from the 6.4 trillion won operating profit that segment posted in the year-ago quarter.



    Partly to blame for the drop was a fall in the average selling price of Samsung's smartphones, as sales of mid-tier options like the Galaxy A improved, taking customers that may otherwise have chosen one of the flagship Galaxy S handsets.



    Despite the grisly year-over-year numbers, Samsung's mobile business appears to be on the rebound after a rough 2014. Operating profit reached an all-time low last year, and the first-quarter numbers are actually up from the fourth quarter of 2014 thanks in part to the launch of the Galaxy S6 and S6 Edge.



    Those new devices helped Samsung recapture the title of world's largest smartphone maker from Apple during the March quarter. Samsung shipped 83.2 million smartphones in that period, compared to 61.2 million for Apple.



    And as further reported in the same Samsung Q1, 2015 Financial Earnings Report

    Quote:


    Segment Sales


    Mobile communications: 23 Billion US


     


    [Q1 Results]

    Mobile : Earnings improved QoQ due to decreased marketing expenses and 

                      expansion of new mid/low-end smartphones (e.g. A/E/J) ;

     

    Revenue declined slightly QoQ due to decreased shipments of tablet and feature-phones

        ? Marketing expenses decreased due to seasonality and stabilized inventory

        - Smartphone: Shipments increased QoQ led by mid to low-end products, ASP declined QoQ

     

    ? Network: Revenue declined QoQ due to decreased investment in LTE network by overseas carriers

     

    [2Q Outlook]

    ? Market: Expect smartphone and tablet demand to stagnate due to continued weak seasonality

     

    ? SEC: Expect earnings improvement led by increased high-end sales with S6 global expansion,

                while smartphone shipments to remain at similar level due to decreased mid/low-end sales;

     

        Expect marketing expenses to increase due to S6 expansion

     

    [’15 Outlook]

    ? Market: Expect product/marketing competitions to intensify amid a slowdown of smartphone growth;

                    Risk for weaker demand exists due to exchange rate impact (e.g. weak €)

     

    ? SEC: Pursue smartphone shipments growth by enhancing product competitiveness;

                Enhance R&D/marketing cost efficiency by streamlining line ups



     


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