Samsung reports second quarterly drop in profits, blames premium phone sales

Posted:
in iPhone edited May 2014
Samsung Electronics reported quarterly operating profits of 8.5 trillion South Korean won ($8.2 billion), a -3.3 percent change from the year ago quarter and its second quarterly drop in a row; the company blamed slowing high-end smartphone and flat screen sales.

Samsung logo


According to a report by Reuters, the results sent the company's stock up slightly by 0.3 percent, because the company had previously guided for operational profit of just 8.4 trillion won.

The entirety of Samsung Electronics, which includes Consumer Electronics (televisions and appliances); IT & Mobile (networking gear; phone, PC and tablets) and Device Solutions (display and chip components) reported net cash after debt of 49 trillion won ($47.5 billion) and cash flow from operations of 12.21 trillion won ($11.8 billion).

Apple, which sells products comparable to Samsung's Mobile group, reported net cash of $150.6 billion and $17 billion debt, a difference of $133.6 billion, and cash flow from operations of $13.5 billion. Apple remains a major customer of Samsung's Device Solutions group for a variety of its components of fabrication of its custom Application Processors.

Trouble in mobile

Reuters stated that "Samsung's mobile business is poised for an uncertain 2014, analysts say. Its broad range of low-end phones are being caught by the improving quality of Chinese-made offerings, while the large-screen advantage of its top-range phones could be countered by new models from Apple Inc."

Samsung Mobile reported profits of 6.43 trillion won ($6.2 billion), down 1.2 percent from a 6.51 trillion won profit a year earlier. For the same quarter, Apple reported twice as much operating income, $13.6 billion, an increase of 8.24 percent over the year ago quarter.

While the company doesn't report sales numbers of products like Apple does, its earnings overview described the mobile market as suffering "lower smartphone/tablet demand under weak seasonality."

The company noted that in developed markets, "channel inventory increased due to intensified competition from the previous quarter" while in emerging markets "demand decreased under weak market condition in EM including China."

Samsung Q1 2014


Looking forward, Samsung observed the over the next quarter, it expects "slight growth QoQ as weak seasonality to continue in 2Q" for phones, and for tablets, "slight demand growth under weak seasonality" and it "forecast competition to intensify with line up diversification by set makers amid slowdown of growth trend."

Apple seeing different demand in mobile

Reporting on the same quarter, Apple just announced a very different picture of the global smartphone market. "iPhone was key in driving our stronger-than-expected results," Apple's chief executive Tim Cook told analysts last week.

"We sold almost 44 million iPhones, setting a new March quarter record," he noted, stating, "These stronger results were broad-based both from a product point of view with demand for each of our three iPhone stronger than its predecessor and from a geographic standpoint."

Cook added, "We gained smartphone share in many developed and emerging markets including the U.S., the UK, Japan, Canada, Germany, France, Vietnam and Greater China, just to mention a few. In fact, we established a new all-time record for total iPhone sales in the BRIC [Brazil, Russia, India and China] countries."A significant part of the high end smartphone demand that Apple saw but Samsung didn't appears to be related to the Android to iOS switcher effect

Responding to a question about China, Cook answered, "we did have an all-time revenue record in Greater China, just under $10 billion at $9.8 billion. iPhone sales were up 28%, that's versus the IDCs market forecast of 20% growth. So we gained share."

A significant part of the high end smartphone demand that Apple saw but Samsung didn't appears to be related to the Android to iOS switcher effect Cook mentioned.

"I think it's important to point out that if you look at some of the numbers we're seeing on first-time iPhone buyers," Cook noted, "people that bought the iPhone 4S: 85% were first-time iPhone buyers. And the 5c: 69% first-time iPhone buyers. So these are extraordinary, and as you would expect, these are also heavily Android switchers: 62% of the people that bought the 4s switched from Android. 60% of the people that bought the 5c switched from Android. And so we're incredibly pleased with this."

On tablets, Cook said, "iPad sales came in at the high end of our expectations, but we realized they were below analyst estimates." He also noted that "over two-third's of people registering an iPad in the last six months, were new to iPad, while over half of the people registering iPhones were new to iPhone."
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Comments

  • Reply 1 of 74
    solipsismxsolipsismx Posts: 19,566member
    Just imagine the backlash Apple would have if they dropped 3.3% and announced it was from weakening iPhone sales.
  • Reply 2 of 74
    jungmarkjungmark Posts: 6,926member
    Somehow the analysts will spin this as bad news for Apple.

    So much for marketing.
  • Reply 3 of 74
    sflocalsflocal Posts: 6,092member
    Now that Samsung's copy-machine is under the microscope, Samsung has to actually try creating it's own stuff and without its R&D department in Cupertino, one can see the sheer crap that's been coming out from that company.



    Add TizenOS on top of that soon to jettison that botched-experiment called "Android", and it's all downhill from there.
  • Reply 4 of 74
    hittrj01hittrj01 Posts: 753member

    As amusing as the Samsung bubble bursting is to watch, calling this a quarterly loss is quite a bit of a stretch. They did still manage to make $8.2 BILLION (with a B).

     

    Quarterly drop YoY =/= Quarterly loss

  • Reply 5 of 74
    rogifanrogifan Posts: 10,669member
    sflocal wrote: »
    Now that Samsung's copy-machine is under the microscope, Samsung has to actually try creating it's own stuff and without its R&D department in Cupertino, one can see the sheer crap that's been coming out from that company.

    Add TizenOS on top of that soon to jettison that botched-experiment called "Android", and it's all downhill from there.
    Like this?
    42440

    I hear they're planning to release a "premium" S5 with a metal case and higher res display. I'd be pissed if I was a current S5 owner.
  • Reply 6 of 74
    hill60hill60 Posts: 6,992member
    Obviously Samsung have plateaued, Apple are still growing.

    It must be the convenient screen size, the most popular on earth.
  • Reply 7 of 74

    It funny when ever I see a title that has something bad to do with Samsung/Google/Android its 9/10 written by DED.G44

  • Reply 8 of 74
    Quote:

    Originally Posted by Rogifan View Post





    Like this?





    I hear they're planning to release a "premium" S5 with a metal case and higher res display. I'd be pissed if I was a current S5 owner.

     Unless they come out with a premium something there "S" line is dead

  • Reply 8 of 74
    slurpyslurpy Posts: 5,382member
    I like how Apple gets an ultra-negative narratove, vicious analyst reports, and proclamations of doom when it doesn't "grow" as dramatically as some would like- meanwhile, Samsung is actually making LESS profit YoY in the mobile business, yet the narrative is that they're crushing Apple. Hilarious.
  • Reply 10 of 74
    Quote:

    Originally Posted by Slurpy View Post



    I like how Apple gets an ultra-negative narratove, vicious analyst reports, and proclamations of doom when it doesn't "grow" as dramatically as some would like- meanwhile, Samsung is actually making LESS profit YoY in the mobile business, yet the narrative is that they're crushing Apple. Hilarious.

    You know I always see someone in the comments saying "ultra negative, vicious analyst reports, and proclamations of doom" yet I never actually see these reports. Where are you getting your news?

  • Reply 11 of 74
    rogifanrogifan Posts: 10,669member
    I still think they consider the Note to be their premium device. All I know is I would be pissed if I bought an S5 and then a couple months later a "premium" version hit the shelves.
  • Reply 12 of 74
    slurpyslurpy Posts: 5,382member
    Also, this is the calm before the storm. Samsung has peaked. When Apple releases its new iPhone lineup, there's absolutely nothing Samsung will be able to do to compete against that. The only thing they have left- which they're desperately trying to leverage- the large screen, will be irrelevant. Apple has played it strong and steady, meticulously and significantly improving all the critical aspects of the iPhone (CPU, Touch ID, etc) that Samsung has been unable to match in any way whatsoever- and the crushing blow will come from a new, larger form factor option that will decimate any appeal Samsung phones will have, for most.
  • Reply 13 of 74
    slurpyslurpy Posts: 5,382member
    Quote:

    Originally Posted by Brandon Powell View Post

     

    You know I always see someone in the comments saying "ultra negative, vicious analyst reports, and proclamations of doom" yet I never actually see these reports. Where are you getting your news?


     

    You don't see critical Apple news stories on mainstream media sites? Then you must be fucking blind, purposely obtuse, or a troll. Probably all 3, going by your previous posts. 

  • Reply 14 of 74
    rogifanrogifan Posts: 10,669member
  • Reply 15 of 74
    Quote:

    Originally Posted by Rogifan View Post



     I would be pissed if I bought an S5 and then a couple months later a "premium" version hit the shelves.

    Exactly! At least announce them at same time like Apple did with 5s and 5c. It just seems like a money grab to release them months apart.

  • Reply 16 of 74
    rogifanrogifan Posts: 10,669member
    Exactly! At least announce them at same time like Apple did with 5s and 5c. It just seems like a money grab to release them months apart.
    Almost feels like some of the "meh" GS5 has Samsung scrambling to make a "premium" device. They've they diluted that brand so much with all the different variants another one certainly wouldn't shock me.
  • Reply 17 of 74
    sflocalsflocal Posts: 6,092member
    Quote:

    Originally Posted by Slurpy View Post

     

     

    You don't see critical Apple news stories on mainstream media sites? Then you must be fucking blind, purposely obtuse, or a troll. Probably all 3, going by your previous posts. 




    Trolls like him say nonsense like that just to get a reaction.  Apparently, he has no ability to use a service called "Google" to answer his question.

  • Reply 19 of 74
    Quote:
    Originally Posted by Slurpy View Post

     

     

    You don't see critical Apple news stories on mainstream media sites? Then you must be fucking blind, purposely obtuse, or a troll. Probably all 3, going by your previous posts. 


     

    Quote:
    Originally Posted by sflocal View Post

     



    Trolls like him say nonsense like that just to get a reaction.  Apparently, he has no ability to use a service called "Google" to answer his question.


    I am neither, I don't go to general news websites like abc, forbes, cnbc for my tech news. What do these sites know about tech, they aren't tech enthusiasts. Also whats wrong with my previous posts?

  • Reply 20 of 74
    Quote:
    Originally Posted by AppleInsider View Post



    Samsung Electronics reported quarterly operating profits of... $8.2 billion... its second quarterly loss in a row. 

     

    Dude, that doesn't make sense.

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