Samsung foresees massive profit decline

“The next big thing is here, as Samsung Electronics likes to say in its ads,” Brian X. Chen reports for The New York Times. “But fewer people appear to be buying it.”

“Samsung, which is based in South Korea, on Tuesday published a financial earnings preview that forecast a profit of about 7.2 trillion won, or $7.1 billion, for the three months that ended in June,” Chen reports. “While that is still a substantial chunk of money, the overall profit represents a decline of 24 percent from the same period a year ago. The profit forecast also missed analysts’ expectations of about 8 trillion won.”

“In order to bolster sales of smartphones over the quarter, Samsung said, it had to increase spending on marketing promotions, which also ate into its profit. For example, in one promotion offered by Verizon Wireless, consumers could buy a Galaxy S5 smartphone and get another phone free,” Chen reports. “Samsung, which offers a range of phones at various prices, is feeling pressure from all sides of the market. In the high end, it faces stiff competition from Apple, whose iPhone sales have recently accelerated thanks to a new partnership with China Mobile, the largest phone carrier in the world.”

MacDailyNews Take: Samsung doesn’t make a “high-end” smartphone. All of Samsung’s phones are cheap ploys aimed at fooling the gullible into thinking they have a real iPhone.

Chen reports, “And in the low end and midtier phone markets, Samsung is facing intense competition from emerging Asian phone makers like Lenovo, ZTE, Xiaomi and Huawei.”

Read more in the full article here.

MacDailyNews Take: Bu, bu, but… market share! Here’s a nice primer on why market share for market share’s sake is a losing “strategy”:

Samsung profit misses estimates as cheap phones struggle – July 8, 2014
Apple smashes Street with revenue of $45.65 billion in Q214 – April 23, 2014

23 Comments

      1. And keep reporting “shipped” not “sold” so they can keep that “market share” bullshit flying. Wall Street is doesn’t care about actual profit or AAPL would be $150 or higher and Amazon would be $10.

  1. This is what happens when you worship at the temple of marketshare. Marketshare and profit are two very, very different concepts that usually run counter to each other in the long-term. Moreover, once you become known for making inexpensive stuff, consumers will not pay lots of money for your future products, no matter how well they are built.

    Samsung appears to have painted themselves into a corner with no easy out.

  2. All the billions Sam Scum spent on FUDing Apple everywhere, buying lawyers, juddges the media, and the infiltrating bloggers only made the ink darker – karma is a bitch.

  3. The next big thing is here, and Scamsung has to give it away in BOGO deals because they don’t have a loyal, premium customer base built on a storied history of quality products that changed the world.

  4. Since Samsung was successful fooling idiots in believing that producing a “Larger Screen” is really innovative, perhaps a larger screen will help. I say 21″ that you strap on your back should be next for Samsung. It’s the next Really Big Thing. 😜

  5. So Samsung posts worse than expected financials and issues warnings about future sales and profits — and Apple’s stock price goes down.

    If NOTHING else this is the perfect example of how Wall Street does not have a clue. None at all.

  6. I think what’s playing out is how Samsung trained buyers into waiting for the BOGOF (and eventual BOG2F) deals.

    The lesson is that a smartphone isn’t a premium smartphone because of its premium price, it is because of its superior experience, day by day, for which buyers are willing to pay a premium.

    Samsung has trained customers to wait for the value price, and not value the experience.

  7. It should be noted that this report is about “Samsung Electronics.” The parent company, “Samsung,” has MANY subsidiaries, including the one that makes key components for Apple products (“Samsung Semiconductor”). There’s even one that builds cargo ships (“Samsung Heavy Industries”), which are no doubt used to transport Apple products. Samsung is not RIM, and should not be dismissed so likely…

    1. Samdung is a scumbag company as a whole! Bribing, cheating, manipulating, straight out lying. And of course copying .

      They have single handedly managed to ruin the honor and reputation of a whole country !

    2. However, if you read the source article:

      Samsung, in a rare move, issued a lengthy statement explaining the disappointing forecast. It blamed a slowdown in growth of the overall smartphone market as well as increased competition in China and in some European markets.

      IOW: Samsung, as a whole, IS suffering due to their slipping position in the phone market.

      Will this kill Samsung as a whole? No. But all we care about is their products that attempt to compete with Apple. Those products are verified to be dragging down Samsung’s profits. √ Exactly as expected. Exactly as desired.

  8. samsung is just a packager

    the S5 has:
    processors by Qualcomm
    an OS by Goggle (stolen from Apple)
    a body design stolen from Apple

    The iPhone has a processor, body and OS all designed by Apple.

  9. Personal thoughts:

    1) The more people use Samsung cheap knockoff wannabe iPhones, the more the word of mouth spreads that they’re crap. Therefore, the incentive to find something better, aka real iPhones, increases.

    2) Samsung is left having to fend for itself in the cheap knockoff wannabe iPhone market, which is populated by folks with no taste and/or no money. That means Samsung either foists cheaply made stupidphones to that market if they want to keep up their profit percentage, or they take a lower percent profit on their cheap knockoff wannabe iPhones.

    IOW: Total market separation is occurring between Apple’s iPhones and Samsung’s cheap knockoff wannabe iPhones. The commingling area between those two markets is decreasing in size as more people share their ‘Samsung Experience’ and jump ship.

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