Many Korean investors really thought that the new Galaxy S6 and Galaxy S6 Edge smartphones would bring their fortune around. However, the financial downfall will continue when South Korean conglomerate noted today that they expected revenue to decline as well as profits in its second-quarter, which will go public later this month.
In recent news, The Wall Street Journal came out with a new report on Tuesday, which notes that Samsung will go on its seventh straight quarterly profit decline. In addition, a source noted some worse than expected results that displayed some lackluster sales for their handset and a gross miscalculation in demand for both the Galaxy S6 compared to the Galaxy S6 Edge.
“For the June quarter, Samsung is expecting revenue of 48 trillion won (approximately $42.35 billion), a drop in revenue of 8.4 percent from the same period a year ago.
Operating profits are expected to decline by four percent year-over-year to 6.9 trillion won, or approximately $6.1 billion. The consensus for second-quarter earnings was somewhere in the high 7 trillion won, or about $6.2 billion.”
Several analyst estimated that Samsung shipped close to 71 million to 76 million smartphones, compared to a Strategy Analytics-estimated 74.5 million handsets shipped a year ago. Samsung does not report the exact number of handsets or smartphones or even tablets shipped for competitive reasons. In addition, the Galaxy S6 and S6 Edge were estimated to have shown for slightly more than 20% of quarterly shipments, or merged fifteen million units.
The source also noted why Samsung will see another quarterly drop in revenue…
“Samsung stopped short of revealing the cause behind another quarterly drop in revenue and profits, but a source told The Wall Street Journal the firm grossly mismanaged demand for the Galaxy S6 versus the Galaxy S6 Edge, despite the fact that both devices were praised by reviewers and greeted with strong advance orders from consumers.”
Other sources like The Wall Street Journal noted some interesting things about Samsung and other competitors that the company has to face, which is chipping away at them, as noted below…
“It’s also not helpful that Samsung has been under attack on the low-end by Chinese competitors that have been putting out very capable devices which cost far less than Samsung’s flagship phones.
So, while sales of the latest Galaxy phones have not met expectations because of the iPhone, Samsung’s high-volume, low-cost feature phones are increasingly less attractive to cash-strapped consumers due to fierce competition coming out of China.”
As noted at the top of the post, Samsung is expected to report their second quarter earnings with precise details, which will happen later on in the month, while Apple will do the same on July 21st.