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Samsung considering shakeup of mobile division in response to sagging profits, sales

With Samsung's profits plummeting last quarter and sales of its flagship Galaxy S5 coming well short of expectations, the South Korean electronics giant is said to be considering changes in its executive team, particularly among the mobile division that competes with Apple's iPhone and iPad.

Samsung


Citing people familiar with the company's plans, The Wall Street Journal reported on Monday that current mobile chief and co-CEO J.K. Shin could lose his position as part of the proposed plans. Eyed to potentially fill his position is reportedly B.K. Yoon, head of Samsung's appliance and television division, which could see the company's mobile operations also fall under his control.

Putting Yoon in charge of Samsung's mobile operations is seen as a way for the company to better focus on the "connected home" market. Apple plans to support smart home devices with its HomeKit tools introduced with iOS 8.
Sales of Samsung's flagship Galaxy S5 were said to be 40 percent lower than the company expected.
Samsung's phone and tablet business has struggled as it attempts to compete both on the high end with Apple, as well as low-end manufacturers like Xiaomi. Last quarter, Samsung's profit crashed 60 percent year over year.

The changes are said to be on the table as part of Samsung's annual internal review process, but come only weeks after the company suffered a 73.9 percent drop in its mobile profits division. During that same quarter, Apple saw its operating profits grow $11.2 billion, or 11.3 percent.

Despite its recent struggles, Samsung is still the second most profitable company in the mobile phone market, according to recent data from Canaccord Genuity. While Apple is estimated to control a whopping 86 percent of the mobile industry's profits, Samsung was estimated to account for 18 percent, with remaining companies actually losing money.

Market watchers believe Samsung's troubles could continue with Apple's entrance into the jumbo-sized "phablet" market this fall with the debut of the 5.5-inch iPhone 6 Plus. That device is pitted against Samsung's Galaxy Note series, which has dominated the phablet space for years.

Samsung's struggles also exist despite the fact that the company ships about twice as many smartphones per quarter than Apple does iPhones. For example, in the third quarter of 2014, Apple shipped 39.3 million iPhones, while Samsung shipped 78.1 million smartphones.

According to the Journal, there have been internal problems in Samsung's mobile division, including overly bullish projections for sales of the company's flagship Galaxy S5, which launched earlier this year. The report said that Samsung built about 20 percent more Galaxy S5 units than it did with its predecessor, outpacing demand and leading to "merchandise piling up in warehouses."

Monday's report revealed that sales of the Galaxy S5 were allegedly 40 percent lower than Samsung expected. In total, about 12 million units were said to have been sold in the first three months, compared with 16 million for the Galaxy S4 in the same timeframe.