Beleaguered Samsung faces more cost cuts, management shake-up

“Samsung Electronics Co. is bracing for more cost cuts and a potential management change later this year as it struggles to halt a sharp slide in profits,” Min-Jeong Lee reports for Reuters. “The world’s biggest smartphone maker by shipments said Tuesday its third-quarter operating profit likely fell as much as 62% from a year earlier, hit by weak smartphone sales. This would mark its fourth consecutive decline in operating profit and its steepest year-over-year decline in the past five years.”

The struggling chaebol “is facing stiff competition from Chinese handset makers who are aggressively launching cheaper phones. In the high-end smartphone market, it is battling Apple Inc., which last month unveiled new iPhones with bigger screens that are popular with consumers,” Lee reports. “Samsung’s weak guidance further highlighted the company’s over-dependence on the mobile division to generate earnings growth. ‘Samsung’s memory chip business is now the only division that is doing well,’ said C.W. Chung, an analyst with Nomura in Seoul. ‘Until the company’s mobile unit is able to recover, continued strength in the company’s chip business will be key.'”

“Critics said Samsung is struggling to figure out its growth strategy beyond its recent focus on smartphones, software and wearable devices,” Lee reports. “Uncertainties about its future also loomed as Samsung grapples with the transition of power to a new generation. Chairman Lee Kun-hee remained in the hospital following a heart attack in May. While Samsung said Mr. Lee’s health was improving, critics said the company apparently lacks visionary leadership to steer it into new growth areas, especially at a challenging time.”

MacDailyNews Take: Samsung’s most “visionary” leadership had but one dictum: Copy Apple.

Samsung wouldn’t know visionary if it was hanging by its teeth off their collective ass.

“Samsung’s mobile business–which generates more than 60% of its operating profit–earlier this year forced hundreds of senior managers to take a 25% cut in their first-half bonuses earlier this year, according to people familiar with the matter,” Lee reports. “Now, executives and senior managers are bracing for more cost cuts, a person familiar with the situation recently said. In a surprise move last month, Samsung quietly shifted about 500 of its software engineers from its mobile unit to other parts of the company.”

MacDailyNews Take: Looks like market share for the sake of market share isn’t all some pundits and so-called analysts purported it to be. (smirk)

“Expectations for the third quarter had already been low as sales of Samsung’s flagship device, Galaxy S5, have been weaker than forecast, analysts said,” Lee reports. “Samsung also sounded a cautious note about the fourth quarter, saying the outlook remains uncertain… Samsung faces strong competition in the microprocessor sector, with Taiwan Semiconductor Manufacturing Co. winning orders for chips used in Apple’s iPhones. Samsung’s microprocessor business has been mired in losses, according to analysts’ estimates.”

Read more in the full article here.

MacDailyNews Take: Beleaguered Samsung. 🙂

Yes, Virginia, there is justice in this world after all.

Apple’s products came first, then Samsung’s:

Samsung Galaxy and Galaxy Tab Trade Dress Infringement

Here’s what Google’s Android looked like before and after Apple’s iPhone:

Google Android before and after Apple iPhone

Here’s what cellphones looked like before and after Apple’s iPhone:
cellphones before and after Apple iPhone

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    1. Apple must now keep stepping up its efforts to make such an opportunistic competitor like Scamsucks weak so it can’t repeat the nonsense of the past. Being shunned as a pariah parts and chips supplier is proving to be very effective. Interesting that the “prestige” of Android is a rapidly fading phenom that only gained traction by virtue of a larger screen. Makes you wonder where Android would have been if Apple had done this two years ago. The best part of all of this is shoving it into lying Fandroid SOB SOS faces. Take no prisoners!! It’s hard to feel gracious after hearing their BS for so long.

  1. Wow. How can this be with shipments up and those “Buy 1 get 2 (or more) FREE!” marketing deals in play and to come. Didn’t that work for BlackBerry and every other fool that is willing to take their company down that spiraling path looking for profits.

  2. If the only division still doing well at Samsung is memory chips then I hope Apple does not buy memory from them and if they do they should stop soon and seed money at some competing companies instead to ramp up their production and hurt Samsung further

  3. You have to wonder how long the losses were occurring since Samsung probably tried to cover it up for quite some time with faked “sales”/shipped units and creative accounting. It’s only now that they are REALLY deep in the hole that they make it public.

  4. When iPhone 6 with its curved glass sides that seamlessly molds within the aluminum body came out, Samsuck said WTF OH Sh*T. 😳

    Apple basically said; Try copying this you slavish South Korean Copycats! 😛

  5. There’s no way out for SameDung. They set themselves up for this downward spiral and Apple patiently waited until the right moment to go for the kill. It’s not like the 5 and 5S suffered in the interim. Tim Cook played this just right. He’s a great strategist and all strategists need patience while taking the big picture into account.

    As for SameDung, it’s definitely a full-blown crisis. They were so focused on the short-term and in denial that by the time they realized what’s happening it was too late. They’re surrounded and trapped. And neither Apple or other Droid competitors (especially the rising Chinese) will relent – not for one moment. They’ll collectively slaughter this dinosaur.

    The SameDung conglomerate group will be fine. They can make up for the mobile division’s demise with smart toasters, rice cookers, refrigerators and washing machines. And oil tankers, commuter buses, department stores, entertainment parks, blah-blah-blah… 🙂

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