Samsung’s Profits Decline on Weak Smartphone Sales

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Samsung's second fiscal quarterly profits are down by nearly 25 percent thanks to weak smartphone sales. The sharp dip is sales came thanks to what the electronics maker called a market slowdown coupled with increased competition.

Weak smartphone sales hurt Samsung's Q2 numbersWeak smartphone sales hurt Samsung's Q2 numbers

Adding salt to their wound, Samsung also said its tablet sales were "sluggish," according to the Financial Times. The company thought demand for its Android-based mobile devices would be substantially higher in China and Europe, but actual sales didn't live up to expectations.

Samsung didn't lay the blame for its disappointing smartphone performance on any specific company, but it's likely two factors came into play: Galaxy S5 sales didn't take off like the company had hoped, and Apple's iPhone is still a market leader and strong competitor.

The company's apparent overconfidence in its ability to tromp on other smartphone makers and drive consumer interest in its latest flagship phone backfired, leaving stockpiles of unsold product collecting dust in China and throughout Europe.

It seems Samsung is taking the situation seriously now because the company issued a performance update along with its usual earnings guidance to address "concerns over uncertainties." That could, however, backfire and raise even more concerns with investors because Samsung hasn't ever done that before.

Analysts have already started talking about their disappointment. KDB Daewoo Securities analyst Will Cho told AP News, "Expectations have been lowered on Samsung. With intensified competition in the mid- and low-end smartphones, it will be tough to stay as lucrative as in the past."

Despite the negative spin it's getting Samsung is keeping its chin up, and thinks Q3 really will bring stronger smartphone sales. "The company cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone lineup," executives said in a statement.

With Apple's iPhone 6 expected to ship this fall, "cautiously" was an important word choice for Samsung.

Comments

Steven Moore

Samsungs biggest problem is that most of the phones it sells are very cheap and only make a few dollars profit.
With cheap competitors and the iPhone 5c selling more than the s5 they are going to have problems.

vpndev

My guess is that their Q3 will be much like Q2. Maybe somewhat quieter since they don’t have any new phones coming. But Apple will probably be slower also because many people will wait for iPhone 6.

The real hurt for Samsung will come in their Q4.

mrmwebmax

+

Samsung’s new motto: The Next Big Thing…is ignored.

marcsten

But, but, what about the fabulous Gear Smart watch? Samsung is first and now all others will copy it! Surely its sales were not included in the second quarter figures?

jhorvatic

Gear Smart what? That so called smart watch is the dumbest thing on the Market besides Samsung. It’s only smart when connected to one of there tablets, otherwise it is as dumb or dumber than any watch you could find on the market today. They I’m sure didn’t mention any thing about there Gear watch because of the dismal sales or lack there of. It’s not smart, it’s clunky and big and just looks cheap and silly.

vpndev

>Samsung’s new motto: The Next Big Thing…is ignored.

More like “The Big Next Thing”

Paul Goodwin

Specsmanship only sells a limited amount of phones to the techno-geeks. The world then figures out that the product really isn’t that great to use, and all those great specs are just that…specs. The performance isn’t necessarily great just because some hardware specs are. 

It’s cheap stuff, it looks kinda so-so, and it’s not that easy to use other than for the very basic stuff. Just not satisfying enough. There will always be a price that will sway customers to try it just to save a few bucks. But at that point the profit margin shrinks. They’re still doing better than most, but it seems the work has turned. Apple is pulling far more people into their camp than Samsung is pulling from the Apple camp.

wab95

Jeff

Cute cry-baby, but I still like the other one. Don’t retire him yet.

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