Samsung Q2 FY2014 profits fall as smartphone and tablets sales slow


The era of record sales and profits appears to be well and truly over for Samsung. Along with a strong Korean Won, slowing smartphone sales and “sluggish” demand for tablets means that Samsung’s Q2 FY2014 financial results came in below both those of the last quarter and the same quarter a year ago. It announced sales of 52 trillion (about CA$50 billion) and an operating profit of 7.2 trillion (about CA$7.6 billion).

Not only did demand slow for smartphones but Samsung is also  facing increased competition from Chinese manufacturers. With the market demand shifting to cheaper smartphones especially in emerging markets, its sales and profit margins are being squeezed.

Samsung also found that customers don’t upgrade tablets as often as they do with smartphones, resulting in slower sales. The trend towards larger smartphones also impacted sales of smaller tablets.

In response to slowing sales, Samsung responded by increasing its marketing efforts. Needless to say, that drove up its costs as it sought to cut down its inventories.

The company expects that things will improve in Q3. “The company cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone lineup,” it said in a statement. Among those new devices should be the new premium Galaxy F and the Galaxy Note 4. While they will certainly capture our attention, it remains to be seen if they will be enough to turn Samsung’s flagging fortunes around.

Source : Reuters