Samsung Electronics revenue slides 8.4% after mismanaged Galaxy S6 launch

Posted:
in General Discussion edited July 2015
Samsung Electronics on Tuesday released its second-quarter earnings estimates, calling for significant drops in revenue and profits based on what one report claimed was a gross miscalculation of demand for the Galaxy S6 versus the S6 Edge.




The company said that for the June quarter it's estimating revenue of 48 trillion won ($42.35 billion), down 8.4 percent year-over-year. Operating profits likely fell 4 percent to 6.9 trillion won, or just under $6.1 billion. Final results are due to be published later this month.

Samsung didn't break out numbers by business division, but a source told the Wall Street Journal that the company originally organized S6 production on the assumption it would sell four regular S6 models for each S6 Edge, the latter of which is more expensive but has a unique curved display, enabling extra features.

The source explained that in reality demand ended up closer to even. This created a surplus of unsold S6 units, especially white ones, while simultaneously leaving Edge demand unfulfilled.

The claim is consistent with a statement by Samsung mobile head J.K. Shin, who in April -- just days before both S6 phones launched -- announced that the company would raise Edge production to meet demand.

Apple may have experienced a similar, if less severe problem with the iPhone 6 and 6 Plus. Shortly after the launch of the two phones in September 2014, some reports indicated that Apple had underestimated demand for the 6 Plus and was scrambling to re-adjust production accordingly.
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Comments

  • Reply 1 of 67
    macvictamacvicta Posts: 346member
    Wall Street loves to make excuses for Apple's enemies. Apple has similar problems with every iPhone launch, you don't see it resulting in a YOY drop in revenue and profit.
  • Reply 2 of 67
    pscooter63pscooter63 Posts: 896member
    So... Poor marketing research.

    This is something you almost never hear about in the world of Apple. I do wonder how much of what we see that makes it all the way to the Apple Store is shaped by an unknown consumer research arm, as opposed to sheer engineering genius or logistics prowess. You must have the pulse of your consumer.

    No single advanced CE company is so right in this, so consistently, as Apple these days.
  • Reply 3 of 67
    mike1mike1 Posts: 1,732member

    Must be time for Samsung to run some ads that make fun of Apple customers. That's always a good way to make make customers convert.

     

    Based on the sales reports I've seen over the last few months. Apple's forecast for 6 vs. 6+ was pretty much spot on. It seems they may have underestimated the initial demand for the 6+. After that, things stabilized to the ratios they initially thought. Although, who knows, Apple may have done that intentionally too.

  • Reply 4 of 67
    maestro64maestro64 Posts: 4,274member
    I love the double speaking going on here. Sales of the S6 were so bad that it was equal to higher cost of the 6 edge. Demand of the edge was not more than expected the had allocated so much resources to S6 they could not respond to the little demand for the edge and then they had to back peddle on the S6 just do the could build some edges.

    Samsung is trying to make it should like they plan to seek 6M S6 and 1M edges but it was more like they got hit with orders for 3M S6 and 3M edges equal demand when reality was they only got 1M S6 order but build 6m and could not build the 1M edges they had orders for. This is the reason Samsung does not shared numbers. We will see throughout the lies. But the financial show you what really happen they can what ever they like.
  • Reply 5 of 67
    MacProMacPro Posts: 17,588member
    Heck, 8.4% is a fraction of the truth ... the cumulative slide over the last year few years is getting pretty enormous! I await Gatorguy's positive spin on this.
  • Reply 6 of 67
    cash907cash907 Posts: 893member
    pscooter63 wrote: »
    So... Poor marketing research.

    This is something you almost never hear about in the world of Apple. I do wonder how much of what we see that makes it all the way to the Apple Store is shaped by an unknown consumer research arm, as opposed to sheer engineering genius or logistics prowess. You must have the pulse of your consumer.

    No single advanced CE company is so right in this, so consistently, as Apple these days.

    "Apple may have experienced a similar, if less severe problem with the iPhone 6 and 6 Plus. Shortly after the launch of the two phones in September 2014, some reports indicated that Apple had underestimated demand for the 6 Plus and was scrambling to re-adjust production accordingly."

    it's not a matter of "may," Apple did miscalculate demand for the 6 Plus. The difference is they were able to adjust production ratios faster than Samsung could and thus didn't miss out on sales to extent Samsung did. Likely this is thanks to Tim Cook doing what Tim Cook does best: logistics. That still doesn't excuse Apple dropping the ball on marketing research for demand prior to launch. They made the same mistake previously with the Gold iPhone 5S, which for a time after launch took months to get. Pointing this out doesn't excuse Samsung's miscalculation, rather simply illustrates how easy it is to get the numbers wrong when launching a new product with different variants, while lauding Apple's ability to adjust much more quickly to actual versus projected demand compared to other companies like Samsung. Why people like you are so sensitive to legit observations like this, I'll never know.
  • Reply 7 of 67
    ceek74ceek74 Posts: 320member

    Is this the "next big thing"?

  • Reply 8 of 67
    suddenly newtonsuddenly newton Posts: 13,719member
    Quote:

    Originally Posted by digitalclips View Post



    Heck, 8.4% is a fraction of the truth ... the cumulative slide over the last year few years is getting pretty enormous! I await Gatorguy's positive spin on this.



    I think you have to say "Google" to call him to the forums. That's his dinner bell.

  • Reply 9 of 67
    suddenly newtonsuddenly newton Posts: 13,719member
    Quote:

    Originally Posted by ceek74 View Post

     

    Is this the "next big thing"?




    They didn't release any numbers, so yes, that proves it is the next big thing.

  • Reply 10 of 67
    leavingthebiggleavingthebigg Posts: 1,084member

    "Apple may have experienced a similar, if less severe problem with the iPhone 6 and 6 Plus. Shortly after the launch of the two phones in September 2014, some reports indicated that Apple had underestimated demand for the 6 Plus and was scrambling to re-adjust production accordingly."

     

    Even with Apple's similar problem, the company sold 50+ million iPhones in its initial three months of being available for sale! The next three months saw 35+ million iPhone sales. Why was Apple able to adjust to market demands faster and better than Samsung? More importantly, why did Apple customers wanting the 6 Plus decide not to wait for it and bought the 6 while Samsung customers chose not to purchase anything at all? Still, I hope there is a good supply of the 6S Plus this September!!!!! :D

  • Reply 11 of 67
    leavingthebiggleavingthebigg Posts: 1,084member

    All, until Samsung releases its real numbers, watch for an increase in published rumors stating Samsung has won supply orders from Apple and others to help ease anxiety of Samsung's investors. The Apple rumors should target AP manufacturing and NAND for the next iPhones, displays for the next Apple Watch and more. This morning I read Samsung Display dropped display prices in an attempt to earn more money to make up for the S6 smartphone losses. Microsoft was named as the big company buying more QHD and full high-definition displays at reduced pricing. This time around, no other company was named. It is good that Apple was not mentioned since Apple does not use those displays! <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

  • Reply 12 of 67
    gatorguygatorguy Posts: 19,290member
    Samsung is not seeing the same successes they did a couple years ago. Part of it could be due to the well-deserved negative PR they've attracted with their IMHO sometimes shady business style. Some too can probably be blamed on better devices from competitors too. Sammy is no longer the only Android licensee with premium handsets.
  • Reply 13 of 67
    adrayvenadrayven Posts: 460member
    Quote:

    Originally Posted by Gatorguy View Post



    Samsung is not seeing the same successes they did a couple years ago. Part of it could be due to the well-deserved negative PR they've attracted with their IMHO sometimes shady business style. Some too can probably be blamed on better devices from competitors too. Sammy is no longer the only Android licensee with premium handsets.



    Many new-comer android handsets hitting them hard. They were making some serious headway in China, then Apple (6/6Plus) AND the low-mid contenders hit at same time, such as the Xiaomi Note Pro.

     

    Basically, unfortunately for Samsung, this is the 'Perfect Storm' worst case scenario of having to battle multiple competitors, getting hit from all sides. 

  • Reply 14 of 67
    nolamacguynolamacguy Posts: 4,758member
    cash907 wrote: »
    That still doesn't excuse Apple dropping the ball on marketing research for demand prior to launch. They made the same mistake previously with the Gold iPhone 5S, which for a time after launch took months to get.

    what a strange world you live in, where crushing sales is an inexcusable dropping of the ball. i.e., failure. i.e., doomed. oh, a Doomed-Troll (tm).

    fact: inventory isn't an exact science. apple is the absolute best at this in the business, in every way.
  • Reply 15 of 67
    cornchipcornchip Posts: 1,100member

    Guys, don't worry, it was just a mismanaged launch, Sammy will be back, bigger, stronger & better than ever next quarter...

  • Reply 16 of 67
    rayzrayz Posts: 814member
    Quote:

    Originally Posted by Gatorguy View Post



     Some too can probably be blamed on better devices from competitors too. Sammy is no longer the only Android licensee with premium handsets.

     

    And perhaps Apple gutting their market?

  • Reply 17 of 67
    gatorguygatorguy Posts: 19,290member
    rayz wrote: »
    And perhaps Apple gutting their market?
    I thought that was a given.
  • Reply 18 of 67
    dasanman69dasanman69 Posts: 12,963member
    Heck, 8.4% is a fraction of the truth ... the cumulative slide over the last year few years is getting pretty enormous! I await Gatorguy's positive spin on this.

    I don't recall him being a Samsung apologist.
  • Reply 19 of 67
    Quote:

    Originally Posted by leavingthebigG View Post

     

    until Samsung releases its real numbers, watch for an increase in published rumors 


     

    Who would believe Sammys "real numbers" anyway?  

    They're already established liars when it comes to sales:

    http://www.idownloadblog.com/2014/04/11/samsung-lied-about-tablet-sales/

     

    And they cheat during benchmarking runs, intended to show performance:

    http://bgr.com/2013/11/27/samsung-benchmark-cheating-banned-htc/

     

    But yeah, you'll believe whatever Sammy says are "real numbers".  Right.

  • Reply 20 of 67
    dasanman69dasanman69 Posts: 12,963member
     
    until Samsung releases its real numbers, watch for an increase in published rumors 

    Who would believe Sammys "real numbers" anyway?  
    They're already established liars when it comes to sales:
    http://www.idownloadblog.com/2014/04/11/samsung-lied-about-tablet-sales/

    And they cheat during benchmarking runs, intended to show performance:
    http://bgr.com/2013/11/27/samsung-benchmark-cheating-banned-htc/

    But yeah, you'll believe whatever Sammy says are "real numbers".  Right.

    It's a big risk to lie about earnings.
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