Less Profit
Samsung Electronics estimated on July 7 that its operating profits in the second quarter dropped around 4 percent from a year ago, mainly due to the weak sales of its latest newest smartphones Galaxy 6S.
The company’s operating profits stood at 6.9 trillion won (US$6.13 billion) in the second quarter, down 4.03 percent from 7.19 trillion won (US$) in the same period last year, Samsung said.
The operating profit estimate shows a 15.38 percent rise from the 5.98 trillion won (US$5.28 billion) profit in the previous quarter. But the quarter-on-quarter growth was mainly attributable to weak seasonal demand in the first quarter.
The sales stood at 48 trillion won (US$42.3 billion), down 8.31 percent from 52.35 trillion won (US$42.39 billion) a year earlier. Samsung didn't offer a net profit estimate for the quarter. Its finalized earnings will be announced later this month.
Analysts said that the weak earnings mainly came as Samsung failed to meet the soaring demand for the Galaxy S6 Edge. The smart device was considered to be only an upbeat sister of the flagship Galaxy S6 when it was launched in April, but gained a higher-than-expected popularity, with the demand outpacing supply for a few weeks after the launch. A bottleneck in the supply of the edgeless smart device is thought to be a main contributor to the weak earnings.
While the Galaxy S6 Edge became an unexpected hope for Samsung, analysts, however, say the rosy sales estimate of 50 to 60 million units sold for the Galaxy S6 lineup must still be revised down.
They also forecast that Samsung's semiconductor business is likely to have performed well on the back of mobile and server dynamic random access memory (DRAM) products, along with mass production of 20-nanometer products.
The system LSI business, which recorded a loss in the previous quarter, is also expected to have turned a profit in the second quarter.
The operating profits of the semiconductor business already outpaced that of the mobile business in the first quarter, with 2.93 trillion won (US$2.59 billion) and 2.74 trillion won (US$2.42 billion), respectively. Analysts said that the trend will continue in the third quarter as well.
Its consumer electronics business, which posted a shortfall in the first quarter, is also anticipated to have returned to the black on the back of improved profits from TV sales.