“Samsung Electronics Co. said it would reduce the number of smartphone models it offers next year, part of a move to cut costs to combat declining profit,” Min-Jeong Lee and Jonathan Cheng report for The Wall Street Journal. “The South Korean technology major said it would cut the number of models by about 25% to 30%, Robert Yi, head of investor relations, said during a presentation in New York. His remarks were confirmed by a company spokesman Tuesday.”
“In October, Samsung reported a 49% drop in its third-quarter net profit. Executives have vowed to make its operations more cost efficient,” Lee and Cheng report. “Samsung will “increase the number of components shared across mid- to low-end models, so that we can further leverage economies of scale,” an executive at the company’s mobile division said during an earnings call last month. Having fewer models will allow Samsung to better manage its inventory and supply chains, analysts say, at a time when demand for its Galaxy smartphones is waning.”
Lee and Cheng report, “Samsung’s margins from its mobile and information technology business were squeezed to just 7% in the third quarter ended September—the lowest level since the end of 2008, before it launched its first Galaxy smartphone.”
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