Thursday, July 31, 2014, 08:14 am PT (11:14 am ET)
Samsung earnings disappoint as company blames competition in smartphone spaceWhile Apple continues to see strong growth with its hot-selling lineup of smartphones, rival Samsung reported lower-than-expected earnings on Thursday, posting its smallest profit in two years.
Samsung's net income of 6.18 trillion won, or $6 billion U.S., fell short of analyst expectations of 6.83 trillion won for the June quarter, according to Bloomberg. Income declined 18 percent, and shares of the South Korean company fell after the earnings were reported.
The Android smartphone maker has been losing ground to lower priced options from Chinese manufacturers Xiaomi Corp. and Lenovo Group Ltd.
Samsung shipped at total of 95 million handsets in the quarter, but the company does not break down how many of those were smartphones. Analyst Timothy Acuri estimated in a note to investors, a copy of which was provided to AppleInsider, that about 75 million of those were smartphones, and the remaining 20 million were low-end and mid-tier devices.
Acuri estimates that Samsung's share of the smartphone market declined a "meaningful" 500 basis points quarter to quarter, down to 25 percent. The company also shipped 8 million tablets in the three-month frame, which was considerably less than the 13 million it had shipped in the preceding quarter.
In contrast, last week Apple reported sales of 35.2 million iPhones and 13.3 million iPads in the June quarter, resulting in $7.7 billion in profit. Though the numbers fell slightly below Wall Street expectations, investors were still encouraged by the fact that iPhone shipments grew 12.7 percent from the same period a year prior.
Samsung had warned earlier this month that it would report a sales decline. The June results mark the third consecutive quarter of decreasing profits.
Samsung is Apple's chief rival in the smartphone space, as the South Korean company sells the overwhelming majority of higher-end devices running the Google Android platform. Samsung's latest flagship device, the Galaxy S5, launched during the company's June quarter, while Apple is expected to unveil its response, the highly anticipated "iPhone 6," in the coming months ahead of the fall holiday shopping season.
But Samsung is also a key supplier for Apple, most notably building all of the custom A-series processors that the Cupertino, Calif., company uses to power all of its iPhones, iPads, iPod touches and Apple TV units to date.
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