Sam Oliver
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.
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.
Malcolm Owen
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172 Comments
IIRC they offered a similar warning about three weeks ago. What a shame. /s
Their dishonesty in marketing is NOT helping them.
I wouldn't worry about Samsung. As soon as Apple releases "The Next Big Thing," Samsung will have something new to copy.
Haha 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.
People are realizing that Scamscum doesn't build quality products. Shocker.