Roger Fingas
Samsung Electronics on Tuesday released its second-quarter earnings estimates, calling for significant drops in revenue and profits based on what one report claimed was a gross miscalculation of demand for the Galaxy S6 versus the S6 Edge.
The company said that for the June quarter it's estimating revenue of 48 trillion won ($42.35 billion), down 8.4 percent year-over-year. Operating profits likely fell 4 percent to 6.9 trillion won, or just under $6.1 billion. Final results are due to be published later this month.
Samsung didn't break out numbers by business division, but a source told the Wall Street Journal that the company originally organized S6 production on the assumption it would sell four regular S6 models for each S6 Edge, the latter of which is more expensive but has a unique curved display, enabling extra features.
The source explained that in reality demand ended up closer to even. This created a surplus of unsold S6 units, especially white ones, while simultaneously leaving Edge demand unfulfilled.
The claim is consistent with a statement by Samsung mobile head J.K. Shin, who in April — just days before both S6 phones launched — announced that the company would raise Edge production to meet demand.
Apple may have experienced a similar, if less severe problem with the iPhone 6 and 6 Plus. Shortly after the launch of the two phones in September 2014, some reports indicated that Apple had underestimated demand for the 6 Plus and was scrambling to re-adjust production accordingly.
Malcolm Owen
Amber Neely
William Gallagher
Christine McKee
67 Comments
Wall Street loves to make excuses for Apple's enemies. Apple has similar problems with every iPhone launch, you don't see it resulting in a YOY drop in revenue and profit.
So... Poor marketing research. This is something you almost never hear about in the world of Apple. I do wonder how much of what we see that makes it all the way to the Apple Store is shaped by an unknown consumer research arm, as opposed to sheer engineering genius or logistics prowess. You must have the pulse of your consumer. No single advanced CE company is so right in this, so consistently, as Apple these days.
Must be time for Samsung to run some ads that make fun of Apple customers. That's always a good way to make make customers convert.
Based on the sales reports I've seen over the last few months. Apple's forecast for 6 vs. 6+ was pretty much spot on. It seems they may have underestimated the initial demand for the 6+. After that, things stabilized to the ratios they initially thought. Although, who knows, Apple may have done that intentionally too.
I love the double speaking going on here. Sales of the S6 were so bad that it was equal to higher cost of the 6 edge. Demand of the edge was not more than expected the had allocated so much resources to S6 they could not respond to the little demand for the edge and then they had to back peddle on the S6 just do the could build some edges. Samsung is trying to make it should like they plan to seek 6M S6 and 1M edges but it was more like they got hit with orders for 3M S6 and 3M edges equal demand when reality was they only got 1M S6 order but build 6m and could not build the 1M edges they had orders for. This is the reason Samsung does not shared numbers. We will see throughout the lies. But the financial show you what really happen they can what ever they like.
Heck, 8.4% is a fraction of the truth ... the cumulative slide over the last year few years is getting pretty enormous! I await Gatorguy's positive spin on this.