Slower global smartphone market growth,
Though the South Korean company said it saw better business conditions in the third quarter, it faces slowing market growth, intensifying price competition at the lower end and the looming threat of
"The earnings deliver a harsh reality check to Samsung that it is not
"Samsung needs to review its smartphone strategy," he said.
While smartphones drove Samsung to record profits last year, the market is maturing. Research firm IDC predicts global shipments growth will slow to 19.3 per cent this year from 39.2 per cent in 2013, while average sales prices will also drop.
Some analysts said Samsung may have no choice but to slash prices for mid-to-low tier devices, where growth is stronger, to go after Chinese rivals such as
Samsung's second-quarter guidance was well below the mean forecast of
Shares in Samsung, down more than 10 per cent since the start of June through Monday, rose as much as 2.1 per cent after the earnings guidance, as some analysts said the second-quarter results may mark a low point in earnings. The stock later gave back much of that gain.
Samsung estimated on Tuesday that its April-June operating profit likely fell 24.5 per cent from a year earlier to
In a separate statement, Samsung said second-quarter earnings would be hit by slower global smartphone market growth, competition in
But analysts on average expect the streak of on-year profit declines to extend into the third quarter, with
"Samsung is most competitive in the mid-to-high end products, but market demand is being driven in the lower-tier end where the biggest issue is price," said
"I think problems for the company's mobile division will continue in the third quarter."
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