Samsung's Profits Decline on Weak Smartphone Sales

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.