News Column

Smartphone woes hit Samsung's Q2 profit

July 8, 2014


Samsung Electronics Co posted a second-quarter profit that missed analysts' estimates as the world's biggest smartphone maker lost market share.

Operating profit was 7.2 trillion won ($7.1 billion), the South Korea-based company said in a filing on Tuesday. That compares with the 8.1 trillion won average of 34 analyst estimates compiled by Bloomberg.

Mobile phone earnings will improve in the current quarter with a limited impact from a stronger won, it said.

Sales were about 52 trillion won in the quarter, the company said on Tuesday. That compares with the 53.2 trillion-won average of 37 estimates.

Earnings have fallen for three straight quarters as Apple Inc has lured premium customers and Chinese manufacturers Xiaomi Corp and Lenovo Group Ltd won budget buyers with high - definition screens at cheaper prices.

Currency moves cut the value of foreign earnings as Samsung's grip on the market for devices with screens larger than 5 inches faces new competition, with Apple said to be preparing bigger iPhones.

Samsung is losing share to Apple in the high-end segment, Lee Seung Woo, an analyst at IBK Securities Co in Seoul, said. "And its branding power no longer works well in the lower-end space anymore so Samsung is feeling the heat from both segments."

Shares of Samsung have declined 5.3 percent this year. The stock dropped 9.9 percent last year, its first full-year decline since 2008.

"The second quarter is a seasonally weak period for smartphone demand in China," Samsung said in an e-mail statement. "The company also witnessed a slowdown in the overall smartphone market growth and saw increased competition in the Chinese and some European markets."

The company's total smartphone shipments slid to 78 million units in the second quarter from 87.5 million units in the first quarter, IBK Securities Co said.

Next month, Chinese suppliers to Apple will begin mass production of its largest iPhone ever, with a screen as large as 5.5 inches, according to people familiar with the plans.

Any move by Apple, which uses a 4-inch display on its current iPhone 5s, would weaken Samsung's grip on the market for large-screen devices with products such as its 5.7-inch Note.

(China Daily07/09/2014 page16)

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Source: China Daily: Hong Kong Edition

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