Feeds

Bloodied Samsung's profits down 25% as it clings to mobe crown

How will it ever survive on $7.1bn operating profit?

Secure remote control for conventional and virtual desktops

Samsung issued unaudited earnings guidance for the second quarter of its fiscal 2014 on Tuesday – and although it once again pulled in an impressive pile of coin, all is not going as well as was hoped for the world's biggest smartphone maker.

The company said it now anticipates revenues of around 52.0 trillion South Korean won ($51.5bn) for the quarter, a decrease of 9.5 per cent from the same period a year ago.

Worse, operating profit is expected to be down a gruesome 24.5 per cent from the year-ago quarter, coming in at approximately 7.2 trillion won ($7.1bn).

Analysts were expecting profits more along the lines of 8.3 trillion won ($8.2bn), on average, according to a poll by Thompson Reuters.

In its guidance, Samsung said the underperforming quarter was due in large part to sagging growth in the smartphone market, particularly as the South Korean firm faces growing competition on the low end from Chinese firms including Huawei, Lenovo, Xiaomi, and ZTE.

As inventories of its cheaper phones piled up in the distribution channel, Samsung was also forced to increase its marketing expenditures "somewhat aggressively," which further ate into its bottom line.

Outside of smartphones, sales of Samsung tablets – a category often hailed as the savior of the computing industry, in light of spiraling PC sales – were generally disappointing, a worrying development.

"For tablets, shipments declined more than expected level due to weak overall market demand and, unlike smartphone, lack of carriers' subsidies policy led to low replacement demand," the chaebol's guidance explains.

The rise of "phablets" – smartphones with 5-to-6-inch screens – also cut into fondleslab sales, Samsung says, particularly in the smaller, 7-to-8-inch display range.

In turn, fewer shipments of shiny gadgets meant slower sales for Samsung's display and semiconductor divisions, which manufacture components for smartphones and tablets.

Still, there's light at the end of the tunnel, the South Korean firm claims. Samsung says that seasonal uptick in its electronics businesses in the third quarter, combined with a tighter marketing budget and the launch of the company's new smartphone lineup, should lead to "a more positive outlook" – though it stopped short of saying to expect year-over-year growth. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Bladerunner sequel might actually be good. Harrison Ford is in it
Go ahead, you're all clear, kid... Sorry, wrong film
Euro Parliament VOTES to BREAK UP GOOGLE. Er, OK then
It CANNA do it, captain.They DON'T have the POWER!
Musicians sue UK.gov over 'zero pay' copyright fix
Everyone else in Europe compensates us - why can't you?
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
Forget Hillary, HP's ex CARLY FIORINA 'wants to be next US Prez'
Former CEO has political ambitions again, according to Washington DC sources
prev story

Whitepapers

Driving business with continuous operational intelligence
Introducing an innovative approach offered by ExtraHop for producing continuous operational intelligence.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
How to determine if cloud backup is right for your servers
Two key factors, technical feasibility and TCO economics, that backup and IT operations managers should consider when assessing cloud backup.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Internet Security Threat Report 2014
An overview and analysis of the year in global threat activity: identify, analyze, and provide commentary on emerging trends in the dynamic threat landscape.