Samsung: good phones but lousy profits

Samsung has told investors to expect lower than anticipated profits for its second quarter results for the fiscal year.

The news reinforces concerns over a year-on-year downturn and finance chief, Lee Sang Hoon has confirmed the financial woes.

With shares in the company declining by 1.9 per cent this week, Lee stated that Samsung’s second quarter earnings were “not that good.” This comes after the company suffered an 8.5 per cent dip earlier this month.

Part of the reason for the slump, is unsatisfactory sales of the company’s flagship Galaxy S5 smartphone. Shipments of the handset have exceeded 11 million units, but it has not been confirmed how many of these have transferred into over-the-counter sales.

Another issue is the growing competition in emerging markets, particularly from Nokia’s budget smarthphones, which has meant reduced sales for Samsung’s mid-to-low end devices.

Ji Sung Hae, an analyst at KTB Investment & Securities said, “Strengthening competitiveness of local players in emerging markets are hurting sales of Samsung’s lower-end smartphones. The main reason behind the lowered earnings estimate largely stemmed from weak smartphone sales.”

While Samsung sold one in every three smartphones last year, the news will still come as a reminder of the increasing competition in the smartphone market.

Samsung is expected to confirm its preliminary earnings for the second quarter early next month.