Samsung warned Tuesday that its estimated operating profit would plunge nearly 60% in the third quarter amid increased competition in the key smartphone market. (AFP / File / Jung Yeon-Je)
Samsung warned Tuesday that its estimated operating profit would plunge nearly 60% in the third quarter amid increased competition in the key smartphone market.
Operating income for the third quarter is estimated at 4,100 trillion won (3.06 billion), down 59.6% from the same period last year.
The estimated sales for their 47,000 billion won, down 20.4%.
The world leader in mobile phones has increased its exports of smartphones but “Operating margins decreased,” said the group.
This fall was due to the increase in marketing expenses and average selling prices declined. During the period, the “number of high-end models sold decreased in proportion to what was added to lower prices for older models,” said the group.
The group warned that the mobile phone sector remain subject to uncertainty in the fourth quarter. But the South Korean giant has promised to deal with new high-end smartphones with the “innovative designs” and made with “new materials”.
In July, the group announced a sharp decline its profits in the second quarter, down 19.5%, and its shares have a higher two-year low.
Samsung Electronics produces a range of diversified products ranging from microchips to home appliances but more than half of its profits come from the area of mobile telephony.
-Double concurrence-
in a saturated smartphone market, Samsung is subject to strong competition in all segments, the high-end as the entry level.
Samsung expects operating profit fall by almost 60% in 3rd Q (AFP / File / Jung Yon-I)
As the top of the basket, the series of smart phones Galaxy S is under attack from Apple’s iPhone. American rival Samsung has not only launched its new iPhone 6 but walking on the toes of the South Korean with the iPhone 6 Plus, a new model of smartphone enlarged screen.
Samsung pioneered these phones halfway between the phone and known as portmanteau word of “phablette” tablet, popular in Asia.
In late September, under pressure from Apple, which had just announced that they sold over 10 million copies of its iPhone 6, Samsung had argued the release of his new big-screen smartphone, the Galaxy Note 4, hoping to retain its number one spot.
As regards the means and the entry level, the South Korean giant is under pressure from Chinese competitors like Huawei and Lenovo flooding emerging markets. In the fourth quarter, Samsung plans to release a new range of smartphones in this segment “with a strong competitive position” both in terms of its features and price.
According to research firm IDC, smartphone sales worldwide reached a record 295.3 million units in the second quarter.
Samsung strengthened its first place with 74.3 million units sold, more double Apple, but its market share fell sharply to 25.2%.
Huawei has become in a very short time the third vendor of smartphones with 20.3 million copies sold in the second quarter (6.9% market share), according to IDC.
Fellow Lenovo is not very far with 15.8 million units sold, representing a market share of 5.4%.
In announcing the premature launch of the Galaxy Note 4 Lee Don-Joo, director of sales and marketing for the mobile division of South Korea, had recognized that the group “going through a difficult period.”
The last flagship smartphone from Samsung, the Galaxy S5, would not have met the fortunes hoped to consumers.
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