Weak smartphone sales hitt Samsung’s Q2 profit

In response, Samsung has pared down its diverse smartphone offerings, and has said it plans to lower the prices going forward for its Galaxy S6 and Galaxy S6 Edge phones.

Samsung announced that Q2 profits dropped from ₩6.25tn ($5.4bn) in 2014 to ₩5.75tn ($4.9bn) this year, in line with the firm’s recently updated earnings guidance.

Profit declined by eight per cent to 5.75 trillion won (£3.2 billion), the fifth successive quarterly fall in profits for the company.

Samsung is still trying to figure out how to continue to hold its shrinking lead in the global smartphone market in a competitive atmosphere that has seemingly placed a target on Samsung’s corporate back. Its expensive Next, NEXT, Big Thing campaign was, possibly, too successful. Problems for the S6 Edge started when the number of handsets produces was lower than those demanded because of the device’s hard to manufacture curved screen. Operating income from its semiconductor division surpassed the 3 trillion won mark for the first time in several years.

Analysts estimate the average selling price for Samsung’s smartphones to have dropped by more than 10 per cent to below $US300 in the latest quarter compared with a year ago, in tandem with heightened cost competition from low-cost rivals in the region.

In early March, Samsung launched its new flagship Galaxy S6 smartphone in two forms as part of its efforts to boost sales.

“Samsung’s new S6 helped fatten up component profits but it failed to meet the golden timing of demand for the device because of the supply issue”, IBK Securities analyst Lee Seung-Woo told Bloomberg.

“I don’t think there’s much to expect from Samsung in the third quarter”, said fund manager Park Jung-hoon at HDC Asset Management. Reports indicated Samsung will launch the Galaxy Note 5 on august 13, which goes against the company’s traditional practice of unveiling new products in September during the IFA event. It was followed by Apple’s 11.6 percent. Ltd. (SSNLF) on Thursday reported a 9 percent year-over-year decline in second-quarter profit, reflecting continued weakness in its flagship handset business.