Samsung predicts massive profit decline, blames slumping smartphone sales
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 "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.
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.
Comments
Their dishonesty in marketing is NOT helping them.
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 [I]do[/I] 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.
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.
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?
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.
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
Bahahahahahaha!!!!
The next big company is already here...Apple!
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/
"The next worst thing"™
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.
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.