Samsung's Profit Drops As Smartphone Growth Slows Down

The lone Apple rival- Samsung has been making the profits like no other in most of the markets including India but as it turns out, the South Korean company's operating profit likely fell to 7.2 trillion won ($7.12 billion) during the quarter. That compared with an 8.3 trillion won mean estimate of 38 analysts polled by Thomson Reuters I/B/E/S.

Samsung's Profit Drops As Smartphone Growth Slows Down

The result, released ahead of final second-quarter figures due around the end of July, would be the lowest since it marked about 6.5 trillion won profit in the Q2 of 2012. It is also weaker than a 7.6 trillion won tipped by StarMine's SmartEstimate. Not only were the Q2 results lower than the previous year's figures, they were also lower than the first quarter's numbers as well. This could possible mean a heavy impact on the Q3 figures negatively.

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Samsung also said that tablet sales in the period, "were sluggish due to a longer replacement cycle than that of smartphones, which is usually between two to three years." Moreover, the company also witnessed a slowdown in the overall smartphone market growth and saw increased competition in the Chinese and some European markets. And this led to higher inventories for the medium- and low-end smartphones.

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The company said that sales of 5 to 6 inch smartphones helped quash some of the demand for 7 to 8 inch tablets.

In a separate statement, Samsung said the won's strength during the second quarter and a slowdown in overall smartphone market growth hurt the company's bottom line. It also reported higher marketing costs as it tried to cut inventories.

Although, Samsung has faced its quarterly failure this time around, it would take some serious steps to recover the loss. Until the company announces its plans hereafter, stay tuned to GizBot!


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