Samsung Reports Lower Smartphone Sales, Operating Profit Falls 25% YoY
July 31, 2014 8:55 AM
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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
remains to be seen.
The Wall Street Journal
This article is over a month old, voting and posting comments is disabled
7/31/2014 2:35:50 PM
They went down because people are getting even more budget conscience and a bunch of cheap Chinese brand phones came into the mix. The Chinese are quickly becoming who will determine market trends. America is a pretty tapped out market. China is still roughly 800-900 million untapped customers. India is the same way.
"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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