Samsung predicts profits will dwindle to a two year low
Samsung Electronics has been having a hard time making profits since the beginning of 2014 due to many reasons. Though the company is still leading with a majority of market share, when it comes to profit, it has been losing out.
The latest predictions of the company say that its second-quarter profits will fall as competition in China has got stiffer and people’s interests have started moving towards phablets rather than tablets and smartphones.
The South Korean tech giant has earned an income of $7.2 trillion in the second quarter which is 24 percent lesser than the last year’s profit for the same quarter. Analysts expected a higher profit this year as the company still holds a good percent of market share. The financial results of the company will be published later this month.
The company is trying to defend itself by explaining the reasons in a one-page document which it calls ‘reference material’. The document points out to factus such as the overall decline in smartphone sales and the resulting accumulation of inventory in China and Europe and the growing interest in phablets cutting into smartphone and tablet sales.
The document also says that the company expects a positive result in the third quarter while also mentioning that the Chinese buyers are putting off their decision to buy a smart device as they are more interested in upgrading to 4G phones.
Analyst Will Cho at KDB Daewoo Securities said in a statement, “Expectations have been lowered on Samsung. With intensified competition in the mid- and low-end smartphones, it will be tough to stay as lucrative as in the past.”
In 2013, three in ten smartphones sold were from Samsung and the company is expecting its handset sales to increase even more in the third quarter of this year.