Samsung Electronics Predict Low Profits In Third Quarter Due To A Declining Sales Of Flagship Smartphones
Analysts are forecasting low profits for tech giant Samsung Electronics for the third quarter of this year as the company struggles with their flagship smartphones' sales.
According to Korea JoongAng Daily Sept. 20, Samsung may expect a 6.4 percent decrease in profit at $5.63 billion as compared to predicted figures two months ago. The latest projection in September was overseen by 22 brokerage houses, while the earlier projection was averaged from estimations of 24 firms in July.
Korea Times noted on the same day the company is expected to earn 50.17 trillion won quarterly, with a 3.4 trillion won net profit from July to September. Yuanta Securities brokerage is also expecting a 6.03 trillion won in operating profit for Samsung Electronics in the fourth quarter.
The tech giant released their Galaxy S6 and S6 Edge in April with positive reviews from analysts and consumers, but the sales for the smartphones did not mirror the market feedback.
High-end market was lured by Apple, while mid- to low-range markets were attracted by Huawei, Xiaomi and other smaller smartphone vendors.
To counter the struggling sales of smartphones, Samsung decreased the prices of their flagship models.
Korea Herald also reported that Samsung Electronics accounted for 21.7 percent of smartphone sales worldwide from April to June, a decrease from last year's 24.8 percent.
"Operating profit in the mobile division is expected to stay below the previous expectation of 2.8 trillion won, which is down by 12 percent," said researcher at Yuanta Securities Korea Lee Jae Yoon. "Although the total number of smartphones sold during the period may appear to grow, it doesn't necessarily translate into profit growth since sales in the smartphone division was driven by mostly low-priced budget phones.
Meanwhile, Chinese tech firm Huawei released a statement on August that its overall smartphone sales worldwide has increased to 39 percent in the first half of 2015, making the firm the fourth-largest handset maker in the world.
