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Samsung reports 8 per cent drop in 2nd quarter profit
The company said that it would be “adjusting” the prices of its two flagship phones in order to “maintain” momentum.
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“Total sales of the S6 and S6 Edge during the second quarter were below expectations”, Samsung’s mobile communications team vice president Park Jin-young said on a conference call yesterday.
As a result, the mobile division at Samsung saw profits fall from 4.42 trillion won twelve months ago to just 2.76 trillion won this quarter.
The company will now be seeking to recoup losses by cutting the price of the Samsung Galaxy S6 and the S6 Edge.
Samsung said operating profit for its semi-conductor unit surged 80 percent in the second quarter to 3.4 trillion won.
The company said handset sales slipped 6.3 percent on-year in the second quarter to 89 million units, indicating that the Galaxy S6 series, which was launched in April, posted weak sales.
At the mobile division, revenues of KRW 26.06 trillion were up 1 percent from the first quarter but fell compared to KRW 28.45 trillion in the year-earlier period.
Samsung has brought forward the launch date of its new smartphone and tablet models to 13 August in a bid to get a jump on rival Apple, which traditionally unveils new devices in September.
When the S6 and S6 Edge phones were introduced to the market in April, the phones were dubbed by local media as the first products to be overseen by the Samsung chairman’s son, Lee Jae-yong, a vice-chairman at Samsung who is widely expected to succeed his ailing father. He is a vice chairman at Samsung who is widely expected to succeed his ailing father. The firm believed that the demand for the S6 would be greater than the demand for the curved screen S6 edge. Researcher TrendForce last week cut its 2015 global smartphone market growth forecast to 8.2 percent from 11.6 percent earlier.
Undoubtedly the most worrying trend here is Samsung’s mobile department, which is traditionally its biggest money maker. The only possible hint was the mention of the strategy to “innovate the hardware to lead the market in the premium segment” and to “continue to add services”.
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Competition in the smartphone market is continuing to intensify, and even the biggest brands in the business have no guarantee of success when they launch a new device.