The Low Post News

Samsung Faces Drop in Profits

Samsung Electronics the leader of smartphones sales faces a third consecutive quarter of falling profits that could turn into a fourth as less expensive models are grabbing more market share of a market that is slowing down and Apple readies its launch of the next generation iPhone 6.

The woes of the South Korea-based Samsung have been exacerbated due to a won that has increased to a high of six years versus the dollar.

The Galaxy smartphone maker is expected to announce on Tuesday that its earnings fell by as much as 12.6% for its most recent quarter that ended June.

Lee Kun-hee the group’s patriarch has been in the hospital since May after suffering a heart attack. The succession map for Jay Lee is still unclear.

Analysts are saying that Samsung’s Galaxy S5 its top-end handset, which was launched late in March, has enjoyed strong sales but not strong enough to offset the weaker shipments for his mid- and low-tier devices.

Samsung’s next product launch is expected for later in 2014 and will be the Galaxy Note 4, but the product has not been forecast as a game changer by analysts.

Its moves into the market of wearable devices such as the smartwatch Gear, remains at the early stage and faces stiff competition from its biggest rival Apple and others.

This in turn has left Samsung under pressure on their margin and without any clear-cut new driver of growth for the short term.

Samsung announced it would increase dividends and the plans for that are expected to be outlined when the company’s complete financial results for the three months ending in June are released.

That might placate its investors who have sent the company shares down close to 5% in 2014.

Some analysts said Samsung might buy shares back in 2014, as part of a broader restructuring of the group tied to the company succession.

The cash-cow electronic handsets of Samsung are suffering due to a market that is slowing and better quality products from manufacturers in China such as Lenovo Group and Huawei Technologies.

IDC the research firm expects that shipment growth globally for smartphones will be 19.3% compared to 39.3% in 2013. The average price per unit has also dropped.

Leave a Reply

Your email address will not be published. Required fields are marked *