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Samsung warns of 25 percent profits slump, 'sluggish' smartphone and tablet sales

Slowing Galaxy S5 sales and 'increased competition' to blame
Tue Jul 08 2014, 09:18

samsung-galaxy-s5-smartphoneKOREAN PHONE MAKER Samsung warned of a 25 percent decline in profit for the second quarter of 2014 on Monday, blaming "sluggish" smartphone and tablet sales.

Just two weeks ago, Samsung CEO Lee Sang-hoon candidly warned that the firm's second quarter "doesn't look too good", and the firm on Monday confirmed that with the release of its profits guidance for the three month period.

Samsung said it expects to bring home an operating profit of 7.2 trillion Won, or around $7.1bn, for the quarter ending June, a 24.5 percent drop compared to this time last year. The company also said that it expects sales for the quarter to come in around 52 trillion Won, a 9.4 percent year-on-year decline.

Samsung had a lot of excuses for this dive in profits. The firm said that increased competition in China and Europe has led to higher inventories of mid-range and low-end smartphones, while increased competition in China has slowed its growth in the region. The firm also said that sales of its tablets were unexpectedly slow during the three months ending June, which it blamed on "longer replacement cycles" compared with smartphones, and the growing popularity of phablet devices.

While the firm has not yet coughed, it's likely that slowing sales of the flagship Galaxy S5 has also had a negative effect on the company's sales.

Analyst outfit Kantar Worldpanel Comtech seems to think so, revealing last month that sales of the Samsung Galaxy S5 are lagging behind the iPhone 5S and iPhone 5C in the UK.

Korean brokerage firm KTB Investment and Securities also recently made note of Samsung's slowing smartphone sales, cutting the firms smartphone shipment forecast for the second quarter by 12.5 percent to 77 million, from its previous estimation of 88 million.

Looking to the future, Samsung "cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone lineup", likely a nod at the rumoured Galaxy Note 4 and Galaxy F smartphones. µ


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