Samsung Profit Fails to Meet Expectations

Is Samsung’s momentum slowing? The smartphone maker has released its financial estimate for the second quarter, and the numbers are worse than many analysts had feared.

Miyoung Kim with Reuters reported, “Samsung Electronics Co Ltd missed already modest expectations for its quarterly earnings guidance on Friday, deepening worries that its smartphone business may have peaked, as growth in sales of its blockbuster Galaxy phones begins to wane and new rivals emerge to eat away at its market share.”

Bloomberg’s Jungah Lee noted, “Operating income was about 9.5 trillion won ($8.3 billion) in the three months ended June, Suwon, South Korea-based Samsung said in preliminary earnings released today. That missed the 10 trillion-won average of 34 analyst estimates compiled by Bloomberg. Samsung stock fell the most in a month.”

The Wall Street Journal’s Min-Jeong Lee added that the profit figure “represents growth of 44% to 50% from the 6.46 trillion won in operating profit posted a year earlier, and a slowing from the 54% rise in operating profit in the first quarter. Sales are expected to come in between 56 trillion won and 58 trillion won, up by 18% to 22% from 47.60 trillion won a year earlier, the company said in a statement Friday.”

According to ZDNet’s Steve Ranger, “Richard Holway, chairman of analyst house TechMarketView, said the problem is that the smartphone market in the developed world, where the highest prices and margins can be achieved, is reaching saturation point. As a result, smartphone vendors are looking at cheaper handsets for emerging markets, he said. ‘All smartphone vendors are bringing out lower-priced units. This will boost volume sales outside the developed countries (like China and India) but will erode margins elsewhere.'”