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SAMSUNG REPORTED ITS smallest quarterly profit in nearly three years Thursday as its key smartphone business faltered under competition from Apple’s iPhone 6 and Chinese handset makers in an increasingly saturated market.
Net profit for the South Korean electronics giant amounted to 4.22 trillion won (€3.17 billion) for July to September, marking a dramatic fall of 48.8% from a year ago, and the lowest figure since the fourth quarter of 2011.
Operating profit also dropped 60% from a year ago to 4.06 trillion won (€3.05 billion), while sales tumbled about 20% to 47.4 trillion won (€35 billion), Samsung said in a statement.
The firm’s mobile phone unit reported operating profit of 1.75 trillion won (€3.05 billion) in the third quarter, a dramatic decline from 6.7 trillion won (€5.04 billion) a year ago.
Samsung has a diverse product line ranging from memory chips to home appliances, but it’s the mobile division that had driven the company’s record profit surge of recent years.
The current slump was starkly reflected in the fact that the mobile unit’s operating profit in the third quarter accounted for 43% of the company’s total, compared to 76% just six months ago.
Despite a slight increase in unit sales volume, actual sales revenue tumbled to 24.6 trillion won from 36.6 trillion won.
Falling margins
“The average selling price of smartphones declined due to an increased share of middle- to low-end smartphone sales and price reductions of existing smartphone models,” the company said.
The third-quarter performance by the world’s largest manufacturer of smartphones and televisions followed a 20% drop in profit in the second quarter.
Despite the slump, Samsung’s share price closed 4.51% higher Thursday at 1.18 million won on expectations of potential dividend payout.
Robert Yi, Samsung’s head of investor relations, said the firm was considering some form of “shareholder return” next year and would make a final announcement in the fourth quarter.
The latest edition of Samsung’s previously all-conquering Galaxy S smartphone met with a lukewarm response on its launch in April.
It was also forced to introduce the new edition of the oversized smartphone Galaxy Note earlier than scheduled in September as the latest iPhone6 from US rival Apple enjoyed better-than-expected demand.
Samsung initially pioneered the market for “phablet” devices – sized between a smartphone and a tablet computer – when it introduced the Galaxy Note series in 2011.
But the firm has come under pressure with the release of the iPhone 6 Plus, which also boasts a large screen.
China challenge
And in the low- to mid-range smartphone segment, Samsung has faced a growing challenge from Chinese firms nipping at its heels in key emerging markets including China.
Samsung saw its leading share in the global smartphone market slip to 25.2% in the second quarter of this year from 32.6% a year ago.
At the same time, Chinese firms – Huawei, Lenovo Xiaomi – saw their combined share rise to 17.3% from 11.4%, according to market research firm Strategy Analytics.
While voicing optimism Thursday over sales of the Galaxy Note 4 and new middle-end smartphones, Samsung acknowledged that “market competition is expected to further intensify.”
“Uncertainty remains for the (mobile) division, due to the year-end surge in competitor smartphone launches, which may require a potential increase in marketing expenses associated with year-end promotions,” it said.
Kim Hyun-Joon, senior vice president of Samsung’s mobile unit, vowed to dramatically reshuffle product lineup to “actively respond” to the needs of the mid and low-end markets.
“Our mobile unit is going through a temporary difficulty, but we are trying to maintain a steady growth by… fundamentally changing our business structure,” he said.
But analysts saw few quick fixes.
“Samsung is struggling in the Chinese market and it may take a while until the situation improves,” said Lee Min-Hee, an analyst at Seoul-based IM Investment and Securities.
China’s Xiaomi dethroned Samsung as the top smartphone seller in China, with its share rising to 14% in the second quarter followed by Samsung’s 12%, according to estimates by the market research firm Canalys.
Xiaomi’s devices typically sell for around $100, while phones in Samsung’s headline Galaxy series are priced at more than $500.
Did anyone explain the rules of fight club to these people!
@Darren Ahern: Seems they did… hence no one’s talkin’ about it!?
@Joe Phillips: they made a Snapchat group about it sure that’s worse than talking about it!
@Darren Ahern: They are cowards, gangs attacking one or two people, not really a fight club.
@Darren Ahern: Haha! Good point
Although I don’t remember hearin’ Tyler Durden mention snapchat so, technically…
@Darren Ahern: came here for this comment. Was not disappointed
People don’t report stuff because Guards do nothing about it the majority of the time. And if they do something, the courts don’t follow through. There is no justice for victims in Ireland.
Can’t do anything if it’s not reported.
@Anthony: Can’t do anything when crimes are reported either apparently.
@Carol Oates: moral of the story: never try
@Carol Oates: “apparently”
@Carol Oates: something tells me you want to see more criminals doing porridge.
@Carol Oates: I didnt know Ireland has a 0% crime detection rate…….. why have you hidden this from us for so long… all wise and powerful one
@Carol Oates: It’s sadly true. Someone without a previous conviction would likely be given a suspended sentence for assault in this country, if it can even be proven through the courts. For victims the idea of taking on a gang like this when none of them are taken off the streets is terrifying since the chances of them or one of their comrades coming for revenge is high.
@Carol Oates: all the gardai do is issue speeding fines
@Rochelle: Exactly right.
I’m in no way condoning any of the behaviour described here but I cannot imagine what my childhood would have been like if all the fights that went on when I was young had been filmed.
Two opposing schools fighting down the park….. fights after school….
Can’t say I can think of strangers ever being randomly attacked but there was a lot of fights when I was young that I’m very glad there is no evidence of today.
@Bob Earner: I always get a chuckle out of the “kids these days”’comments from older generations. The same stuff and worse went on back the. Just there wasn’t cameras everywhere to record it or social media to share it
@Kian: It’s the weirdest form of amnesia!!
Can you imagine if every fight resulted in a criminal assault charge!? 60% of my school would have been up in front of the Childrens Panel!
@Bob Earner: There has always been fights after school. But these youths seem to be recording random vicious assaults just for the fun of it. A big difference.
@Kian: ha exactly. If there’s a gun attack : jaysus the worst I ever saw was a knife.
If there’s a knife attack : why can’t they just use their God given fists the cowards!
Use fists : what is wrong with these monsters bring back the rope
@Bob Earner: War of the Buttons is a classic Irish children’s film about two rival schools baiting lumps out if each other.
any shyte bag who randomly attacks someone should be tarred, feathered and forced into the wilderness to fend for themselves
@Eon Cocker: and blow we go live to the 1700s
@Seriously stunned: and now we go live to the 1700s.
Gardai are only getting involved and making a statement in the media because it’s in the public eye and they have to be seen to be doing something. Especially after the recent stats on young offenders getting away with a slew of crimes. They couldn’t care less about teenagers fighting, in reality.
Don’t bother reporting it to the guards they are useless. I witnessed a car being broken into at the weekend rang the guards to report it & they never came, an hour later my wife rang back & reported it again, they never came and now the car is just sitting there wrecked. The scrotes sat in it for an hour trying to get it started and then just walked away.
@Tom Sawyer: no money in responding to that.
@Pius Flynn: we get it you don’t like the Gardaí…yawn
We effectively have no police force in this country now as all their time is taken up gathering revenue for the Government by harassing hard working people going about their business.
No other European people would put up with this lunacy
@Pius Flynn: 10 people dead in 7 days on Irish roads! I think enforcing road traffic legislation is a worthwhile endeavour
Why do people insist on sh*tting on the Gardai when the article clearly states that they are pro-actively trying to sort the problem out?
@Pius Flynn: What exactly are you getting at? Hard-working people speeding; not paying tax; insurance; unsafe vehicles? And if you think that no other Europeans would put up with this, I invite you to try any of the above in France, the Uk, Spain or Germany. You might be surprised to find yourself walking home.
@David Irwin: it depends on what legislation you are talking about.
And anyway we have enough laws, we need training for young drivers, and roads that are safe to drive on.
@George Salter: In other country’s they have technology called number plate recognition, you were probably too busy shining the local superintendents shoes to hear about it.
In other country’s if the police tried to set up checkpoints like they do here, they would be driven across, and rightfully so.
If you pay your tax and insurance and you have a valid drivers license you should be able to go about your business unhindered.
The police have far too much power in this country, it’s a police state really.
@Pius Flynn: been stopped at checkpoints in Germany and Slovenia. Anymore “facts” you want to make up?
Make the statements before someone dies.
His name is Robert Paulson…
Could we not just get some undercover Gardai to join the group and go beat the bejaysus out of them?
have your say