HOME     MENU     SEARCH     NEWSLETTER    
THE ENTERPRISE SECURITY SUPERSITE. UPDATED 2 MINUTES AGO.
You are here: Home / Tech Trends / Slowing China Sales Hurt Samsung
Neustar, Inc.
Protect your website & network using real-time information & analysis
www.neustar.biz
Slowing China Sales Hurt Samsung
Slowing China Sales Hurt Samsung
By Youkyung Lee Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
JULY
09
2014
Samsung Electronics Co. said operating profit declined to a two-year low in the second quarter, hit by the strong local currency and slowing demand for smartphones in China.

The result highlights how dependent the company has become on smartphones for its earnings. Sales growth in high-end Android devices has waned after several years of rapid expansion. Growth remains robust in emerging markets where cheap competitors have sprung up.

The South Korean electronics giant said Tuesday its operating income was 7.2 trillion won ($7.1 billion) for the three months ended June 30, down 24 percent from a year earlier. That was significantly below analysts' expectations of about 8 trillion won. The company releases its full quarterly financial results later in the month.

The figure was the lowest since the second quarter of 2012 when Samsung's income was 6.5 trillion won. Since then, Samsung's operating profit hasn't fallen below 8 trillion won, largely driven by robust sales of Galaxy smartphones.

Quarterly sales fell 10 percent from the previous year to 52 trillion won.

Samsung, which usually doesn't elaborate on its financial performance until its full report later in the month, issued a rare statement to explain its result, which Nomura analyst Chung Chang-won described as "very disappointing."

The company blamed the lower profit on the South Korean currency's appreciation against the U.S. dollar and the euro, as well as most emerging market currencies. The won hit a 6-year high against the U.S. dollar earlier this month.

It also said sales of medium- and low-end smartphones were weak in China and in some European countries because of stronger competition and sluggish demand. Fewer consumers in China bought handsets that run on 3G mobile networks as they waited for faster 4G networks.

Samsung, which earlier this year vowed to aggressively expand its tablet sales, acknowledged it faced some challenges in selling tablet computers. Consumers weren't replacing their tablet PCs as often as smartphones, while smartphones with a giant screen of 5 or 6 inches, such as Samsung's Galaxy Note series, replaced demand for smaller tablets that measure about 7 or 8 inches.

"Expectations have been lowered on Samsung," said Will Cho, an analyst at KDB Daewoo Securities. "With intensified competition in the mid- and low-end smartphones, it will be tough to stay as lucrative as in the past."

About three in every 10 smartphones sold globally were made by Samsung in 2013 and the company's handset sales will likely improve during the current quarter. But Cho said how much profit it can take would be more important than how many handsets it can sell because most sales growth would come from cheap smartphones. (continued...)

1  2  Next Page >



© 2014 Associated Press under contract with NewsEdge. All rights reserved.
 

Tell Us What You Think
Comment:

Name:

Like Us on FacebookFollow Us on Twitter
TOP STORIES NOW
MAY INTEREST YOU
Neustar, Inc. (NYSE: NSR) is a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, information services, financial services, retail, media and advertising sectors. Neustar applies its advanced, secure technologies in location, identification, and evaluation to help its customers promote and protect their businesses. More information is available at www.neustar.biz.
MORE IN TECH TRENDS
Product Information and Resources for Technology You Can Use To Boost Your Business
© Copyright 2014 NewsFactor Network, Inc. All rights reserved. Member of Accuserve Ad Network.