Samsung Will Discount Galaxy S6 Phones After Major Profit Drop

Samsung will drop the price of the Samsung Galaxy S6 and S6 Edge in a bid to revive its flagging smartphone sales.

Gains in the won made Samsung products more expensive in export markets, with the South Korean currency advancing about 10 percent against the euro in the 12 months ended June.

AP An advertisement for Samsung’s Galaxy S6 and S6 Edge smartphones is seen at a Samsung store in Seoul, South Korea.

Samsung tried to smooth over the tough operating conditions in the smartphone market by saying the overall drop in smartphone shipments was due to declining shipments of older middle-to-low end models.

The company said that it would be “adjusting” the prices of its two flagship phones in order to “maintain” momentum. Unlike its mobile and consumer electronics businesses that failed to meet expectations, though, the company’s memory chip and processor division seems to be doing very well.

Operating profit was at 6.9 trillion won for the quarter, down 4 percent over the year, from 7.19 trillion won in Q2 2014.

Shares of Samsung had fallen 1.6 per cent to 1,243,000 won at 9.18am in Seoul.

“While [the second half of] 2015 is expected to present mounting challenges, the company will try to improve earnings”, Samsung said, noting that it expects growth in TV sales. Samsung intends to remedy this with its new Galaxy Tab A series and another “new product scheduled for later this year”. However, net income rose 25 percent from 4.52 trillion won in the preceding first quarter.

Patrick Moorhead, president and principal Analyst of Moor Insights & Strategy, a leading tech analyst firm based in Austin, Texas, said Samsung did not offer enough innovation in its Galaxy S6 and S6 Edge devices to appropriately counter Apple’s record iPhone 6 sales.

The offering of a more affordable but still powerful smartphone device adds to Samsung’s problems.

Revenue also slumped to 48.5tn won, from 52.4tn won a year ago, well below forecasts of 53.4tn won.

As Bloomberg points out, one reason its latest phones didn’t perform particularly well despite critical acclaim and heavy marketing is that the company misread customer demand.