July 8, 2014
On Tuesday, Samsung warned investors that quarterly profits have fallen 24 percent year over year thanks to declining smartphone demand and increased competition in China and Europe. The South Korean electronics giant, however, expects things to improve in the months ahead. For its second quarter, Samsung reported an operating profit of $7.1 billion (7.2 trillion won), which missed analyst estimates of $8 billion (8.1 trillion won). The telecommunications unit, which accounts for 70 percent of earnings, saw profits of 5.1 trillion won on sales of 31 trillion won. In the June quarter, the company shipped 78 million smartphone units. This compared to the 87.5 million units shipped in the previous quarter. Samsung cites increased competition from medium to low-end smartphone manufacturers for the decline in shipments. In making its announcement, Samsung also blames a strong Korean currency for its woes, as well as increased marketing expenses to reduce inventories. Samsung told Bloomberg:
The second quarter is a seasonally weak period for smartphone demand in China. The company cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone lineup. Samsung does not expect any major marketing expenditure to occur in the upcoming quarter.Apple, which is Samsung's main competitor, is expected to unveil the "iPhone 6" in September. The company will announce its quarterly results on Tuesday, July 22. See also: Samsung Calls iPhone Users 'Wall Huggers' In New Ad, To Combat Apple, Samsung Launches Its Own 'Test Drive' Program In 5 US Cities, and Apple and Samsung May Finally Be Ready To Admit They Need Each Other.