Samsung Warns Investors of Massive Profit Decline

Samsung Warns Investors of Massive Profit Decline

Source: AFP

Samsung has enjoyed tremendous growth and profits over the past couple of years but that could be coming to a gradual end soon. The company has just provided estimates for its financial performance in Q2'14 and it does not look good.

Specifically, Samsung has projected earnings of around 7.2 trillion won (roughly US$7 billion). While that still sounds like a lot, it actually represents a massive 24.5% decline year-over-year - Samsung made around 9.5 trillion won in the same quarter last year. Analysts have earlier projected earnings of around 8 trillion won. Even if actual results are no where near this bad, this quarter would still mark a third consecutive quarter of profit decline.

The drop in profits, said Samsung, can be attributed to a stronger Korean won as well as weakening demand for smartphones. Additionally, while Samsung is still the world's top smartphone seller, it is facing increasing competition in the budget market due to Chinese manufacturers such as Xiaomi and Huawei.

Lee Seung-woo, a technology analyst at IBK Securities, said, "The earnings deliver a harsh reality check to Samsung that it is not Apple, but Samsung. Its strategy of selling phones at expensive prices will not work anymore, as Chinese rivals also offer good enough phones at much cheaper prices."

This view was echoed by other analysts and also tech journalists, who believe that Samsung has no software-based differentiation and competing on price alone is not a viable long term strategy.

Source: Reuters, Apple Insider

All News Categories

News for Past 12 Months

Subscribe to HWZ Here!

Subscribe now to receive latest tech news, articles and promotions straight to your inbox!
By signing up, you indicate that you have read and agreed to the and .

Obsessed with technology?
Subscribe to the latest tech news as well as exciting promotions from us and our partners!
By subscribing, you indicate that you have read & understood the SPH's Privacy Policy and PDPA Statement.