Alnoor M Peermohamed
09:53 01st Aug, 2014
Samsung Reports Its Lowest Quarterly Profit In Two Years
Profits during Q2 of 2014 stood at $6.1 billion, down from $6.96 billion in the same period last year.
Last month Samsung warned investors that 'weak demand' for smartphones along with a bloated marketing spend would eat into its earnings in Q2. Now, the full extent of the damage has been revealed, with the company posting a quarterly profit of $6.1 billion, down from $6.96 billion last year.
Samsung's most recent quarterly profits are its lowest in two years, and as expected the company blames the global slowdown in smartphone sales and a strong won for its dismal performance. With a major portion of revenues being generated through smartphone sales, the company noted that it increased spending on marketing activities to clear stocks.
Given the lesser number of phones hitting the market, Samsung's chip manufacturing arm too took a hit. The company stated that the second half of 2014 will 'remain a challenge' as competition intensifies and the average cost of smartphones continues to fall.
Samsung also registered a massive drop in smartphone sales in the last quarter, but expects sales to grow given the launch of new flagship products. This will almost definitely be the Galaxy Note 4 and the partially metal-clad Galaxy Alpha, which are expected to launch in the coming months.
While the Galaxy S5 hasn't performed as expected, sales haven't been bad with the company noting that the device has outsold its predecessor by 10 per cent. Samsung's biggest pitfall has been its lack of focus on the low and mid-range smartphone market, where Chinese manufacturers like Xiaomi, Lenovo and Huawei have been looking increasingly stronger.
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