Korean electronics giant Samsung has reported its fifth straight year-on-year profit fall as poor smartphone sales saw an 8pc decline in profits in the second quarter.
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Sales fell 7% over a year earlier to 48.5tn won and operating income dropped 4% to 6.9tn won, in line with its earnings preview earlier this month.
Samsung, the world’s largest smartphone maker by shipments, is continuing to lose market share of its flagship handset business to U.S. rival Apple, Inc.
Samsung experienced “supply difficulties from higher-than-expected market demand for the Galaxy S6 Edge”, the company said in a statement released alongside their second quarter financial results.
Analysts believe part of the reason for the downturn is that the company could not meet demand for the Samsung Galaxy S6 Edge, the curved-screen S6 compatriot, after underestimating its appeal.
Samsung’s chip division was the biggest beneficiary of the new S6 as its mobile unit switched to in-house applications processors and modem chips instead of those from Qualcomm.
The report did not say, however, when the prices would be slashed or by how much.
The company is scheduled to hold an event on August. 13 in New York city, bringing forward its usual product launch schedule by one month. Sales and profits edged up on-quarter in Samsung’s mobile division, but it’s not performing anywhere like its heyday a few years ago.
This is nearly the same situation that the company found itself in during the first quarter of this year. It was supposed to help renew interest in the Galaxy series after consumers had grown bored with the same plastic phone being recycle and upgraded each generation, and the problem is, the strategy worked.
Samsung Samsung Electronics Co Ltd (KRX:005930) seems to be eating humble pie as its inability to compete effectively with Apple in the premium smartphone market resurfaces.
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Samsung misread demand for the S6 models released in April, failing to produce enough three-sided screens for the Edge while the regular version struggled to challenge bigger iPhones. Samsung has held the new product launch in September in previous years. We may also see a new Galaxy S6 edge plus variant.
