Samsung misses revenue and profit forecasts

South Korean electronics giant Samsung took a big gamble on its flagship Galaxy S6 and S6 Edge smartphones, but apparently failed to hit the jackpot, as said by new earnings results. Improved revenue since Q1 2015 came from shipments of Samsung Galaxy S6 and Galaxy S6 edge smartphones.

In the key smartphone market, an area led by Samsung until recently, the popularity of Apple’s iPhone 6 and 6 Plus handsets and the rise of lower-cost phones from Chinese vendors squeezed Samsung at both the high and low end of the market.

Samsung’s chip division was the biggest beneficiary of the new S6 as its mobile unit switched to in-house applications processors and modem chips instead of those from Qualcomm.

The company’s components division was the one growth area in the quarter, with revenues up to KRW 17.87 trillion from KRW 16.23 trillion a year ago. It managed to push up the mobile division’s operating profit to 2.7 trillion won in the first quarter this year. Samsung shares moved in negative territory in Seoul trading, falling more than 1.6 percent in the morning session.

Those new “premium models” likely refer to the upcoming Galaxy Note 5 and a new extra-large model, expected to be called the ‘Galaxy S6 edge+’.

Total sales for the quarter decreased 7 percent to 48.54 trillion won from last year’s 52.35 trillion won, but rose 3 percent from 47.12 trillion won in the prior quarter.

The company said it plans to sell its flexible OLED display that was adopted into the curved-screen Galaxy S6 Edge to other makers.

Samsung Electronics Co Ltd on Thursday offered a downbeat outlook for the second half of the year as smartphone market growth slows and ahead of the expected release of new iPhones from arch rival Apple Inc. It was up 15.36 percent from the prior quarter, but down 4.03 percent from a year earlier.

As a solution, Samsung is considering offering customers with discount deals on the Galaxy S6 and Galaxy S6 Edge. Q2 smartphone sales were down from the previous quarter, as well, and Samsung blames lower sales of older phones.

Samsung has seen profits sag since late 2013 due to increasing competition in the smartphone market the company had dominated for years.