Samsung Expects Seventh Straight Quarterly Profit Decline
Samsung issued an advisory on its expected financial results for Q2 2015 and the news isn’t good. The once high-flying manufacturer posted its seventh straight quarter of declining profit as sales of its flagship Galaxy S6 and S6 Edge fell short of expectations.
After four years of doing nothing wrong, Samsung now is mired in a nearly two-year streak where it can’t do much right, assaulted by Apple (AAPL) at the high-end of the smartphone market and a slew of nimble, low-cost handset makers at the mid- to entry-level. But with that said, the company’s execution is anything but exemplary in both the smartphone and PC arenas.
For the quarter ending June 30, the vendor forecast operating profit of about 6.9 trillion won, a 4.2 percent slide from this time last year. Samsung, which provided little detail in its advance notice, didn’t offer a net income figure nor did it break out expected earnings by division. Samsung said revenue likely dropped to 48 trillion won, down 8.4 percent from last year, and well below analysts’ expectations of 53 trillion won.
Researcher Strategy Analytics estimates Samsung sold up to 76 million smartphones in Q2, up slightly from the 74.5 million units it sold at the same time last year.
Samsung said it will post final quarterly results later this month.
The vendor’s forecast Q2 results follows a disappointing Q1 that saw its earnings slip again with a 31 percent year-over-year decline to 5.9 trillion won. The loss closely mirrored its Q4 2014 performance when profit fell 27 percent to 5.3 trillion won from the prior year.
Samsung banked on sales of its new Galaxy smartphones to right its ship from the long string of quarterly profit declines, as its mobile division repeatedly dragged down profit in other units. With the new Galaxy S6 and Galaxy S6 Edge, however, the vendor appears to have badly miscalculated demand for the units.
The Wall Street Journal reported Samsung expected to sell four Galaxy S6 smartphones for every Galaxy S6 Edge sold and aligned its production along those lines. But when demand for the Galaxy S6 Edge instead matched that of the Galaxy S6 smartphone it left the vendor with an abundance of the latter and a shortage of the former.
Samsung’s troubles aren’t confined solely to its mobile division. In late June, word surfaced that Samsung intentionally was disabling Microsoft’s (MSFT) Windows Update on some of its computers so as not to interfere with its own SW Update tool, which the vendor offers as a downloadable utility from its website.
After a few days of stonewalling, denying and stalling, Samsung finally said it will issue a fix to stop its SW Update tool from disabling Windows Update.