Print 32 comment(s) - last by niva.. on Aug 1 at 1:18 PM

While Samsung still made a ton of cash, its smartphone sales and earnings are down

Yesterday, we got a look at how Samsung is performing in the current global smartphone market. IDC’s numbers for Q3 showed us that Samsung’s Q2 2014 shipments fell by 3.9 percent year-over-year (YoY) while its market share for Q2 2014 dipped to 25.2 percent compared to 32.3 percent for the same period last year.
While Samsung’s numbers were down, the overall market saw sales of 295.3 million units for Q2 2014 while sales were up 23.1 percent YoY.
With this background information, we have a little bit of insight into Samsung’s Q2 earnings. As a whole, the company made $6.07 billion in net profit on total revenue of $50.86 billion. Operating profit came in at $6.98 billion, which represented a 15 percent decrease from Q1 2014. More importantly, it was a 25 percent lower than the same period last year ($9.27 billion).

Samsung’s mobile division brought in the most cash for the company, delivering sales of $27.60 billion and an operating profit of $4.29 billion. Those figures were down 12 percent and 31 percent respectively from the same period last year.
Despite what IDC has shown with its own data, Samsung blames its performance on slow global growth:
The second quarter was affected by several factors including the slow global sales of smartphones and tablets and escalating marketing expenditure to reduce inventory.
For those that are expecting Samsung to rebound in the immediate future, the company notes that the “second half of 2014 will remain a challenge” and that “profitability may suffer due to a heated race over price and product specifications.”
However, Samsung is looking to release new “premium mobile devices” and new “mid-to-low-end models” to better compete with mass-market mobile devices. The next big launch on tap for the company is the Galaxy Note 4 that will bring a QHD screen to the table.
The company also plans to launch a phone using “new materials” other than plastic according to The Wall Street Journal in the future, so whether the device will be the Galaxy Note 4 or the Galaxy Alpha remains to be seen.

Sources: Samsung [1], [2], The Wall Street Journal

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: post smartphone era now?
By Reclaimer77 on 7/31/2014 12:01:06 PM , Rating: 1
Why companies think people need or want to upgrade every 3-6 months just because of a shiny new pixel is beyond me.

Why car companies keep coming out with new models every year is beyond me. My car is 5 years old and it's just fine, so nobody else should want a new one either!!


Sorry just maybe helping you see how short-sighted your viewpoint is.

This is a GIGANTIC market. Every day literally MILLIONS of people's contracts are up, and they're looking for new phones. Every day literally MILLIONS of first-time smartphone buyers have to choose which phone they want.

Seriously what the F is wrong with you? There's a massive market out there, and it's the job of smartphone OEM's to compete for that business. What are you even trying to say? That they shouldn't be making new models?

Most people I know choose a phone and stick with it until it dies.

And if most people you knew drove cars till they blew up, should that mean nobody should be making new cars?

Please try to see outside the little box that is your life.

RE: post smartphone era now?
By hughlle on 7/31/2014 12:39:10 PM , Rating: 2
I don't think you understand the argument ;)

It is not about not making new phones. It is about understanding that it has reached the point where there is no need to upgrade as often, and as such sales expectations shouldn't be so high. Certainly people will buy new phones, but at this point, as figures clearly show, a lot of people are not upgrading at the end of each contract, but holding onto their model with a reduced contract price until something is released that actually gives them a reason to fork out a good chunk of cash.

The figures rather speak for themselves surely? Samsung are no longer making phones with enough must-have features to convince people to upgrade to their new one.

RE: post smartphone era now?
By Reclaimer77 on 7/31/2014 12:49:41 PM , Rating: 2
We're talking about a 25% decrease in YTY. What you're talking about would be gradual, not overnight.

Sorry but there's a lot more going on here than just "phones be gooder enough"....

RE: post smartphone era now?
By Spuke on 7/31/2014 4:30:25 PM , Rating: 2
Seriously what the F is wrong with you?
LMAO! crack me up sometimes.

RE: post smartphone era now?
By w8gaming on 7/31/2014 7:27:14 PM , Rating: 2
Read the figures closely (in another article). It is indeed a gradual drop in sales volume. YTY change is -3.9%. It is the market share which has been reduced to 25%. Due to competitions are selling more Android phones.

RE: post smartphone era now?
By tonyswash on 7/31/2014 3:18:51 PM , Rating: 1
Interestingly Benedict Evans has just written a clever piece of data crunching analysis showing how short the replacement cycle of Android phones is.

Here is a take away quote from the article:

What should we make of this? These are (to repeat) approximate numbers, but it seems clear that Android phones remain in use for well below the 24m average for the market, and during the peak growth period the replacement rate was closer to one year. The chart below compares what a 24m replacement cycle would have looked like compared to Google's own numbers.

The cycle clearly seems to be lengthening, but it's not clear yet how much.

Meanwhile, we don't have comparable data for iPhones, but the fact that around a third of the active base is on the iPhone 4 or 4S does rather speak for itself: if anything the iPhone is on longer than 24 months, especially if you take 2nd hand into account (though quite a lot of that second-hand seems to be exported to emerging markets, complicating the picture).

This has some interesting ecosystem implications. It looks like the Android ecosystem has to sell significantly more phones than Apple to get the same number of active users. This is probably good for the OEMs (presuming the replacements are not people switching away from Android to iPhone), but less good for Google. Ironically, Apple might prefer it to be the other way around as well - it would probably prefer you buy a new phone every year. But this makes comparing market share problematic - it looks like a given number of iPhone unit sales might mean more customers than the same number of Android unit sales.

As for Samsung, it's just being squeezed, caught between the rapidly developing Chinese Android OEMs capturing sales and driving down margins at the lower end, and Samsung's failure to dislodge Apple at the premium end of the market. Plus of course Samsung cannot extract more revenue and profit from the non-hardware parts of the Android ecosystem because Google takes pretty much all of that.

RE: post smartphone era now?
By Reclaimer77 on 8/1/2014 9:13:26 AM , Rating: 2
Meanwhile, we don't have comparable data for iPhones


You don't see anything wrong with this? The article, which is once again another clearly pro-Apple "source" of yours, is basing the entire argument on a comparison between Android and the iPhone. And yet he's missing the ENTIRE data set for the iPhone!

I mean..hello?? It's impossible to make an objective informed decision in the absence of ANY data!

I know you have a problem when this approach is used to confirm Climate Change theory. You should accept no less when it comes to Apple.

RE: post smartphone era now?
By degobah77 on 8/1/2014 10:11:10 AM , Rating: 1
I'm not saying companies should stop making phones, just that they should stop expecting to keep selling at the same rate now that the whole planet has a goddamn phone. Most people don't need a new car every year. Most people don't need a new phone every 2 fuckin' weeks, either. So the point that you missed is this; why is anyone shocked that sales are down?!?!?

“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki