Samsung Galaxy S6 Fails to Reverse Profit Decline in Fifth Straight Quarter. NDTV: Samsung Electronics suffered a fifth straight decline in quarterly profit as the Galaxy S6 failed to reverse its declining fortunes in global smartphone sales.
Fall of total company revenue in the quarter from April to June was 8 percent, but a much larger decrease of 38 percent in revenues from mobile division reported. The sharp drop in profit in the mobile business came despite an ambitious start to the quarter with the launch of two flagship smartphones: Galaxy S6 (Revision | Photos) and Galaxy S6 edge (Revision | Photos) with a side screen curved.
“Total sales for the S6 and S6 Edge during the second quarter were below expectations,” said Park Jin Young, vice president of mobile communications equipment Samsung said in a conference call Thursday.
The decrease in mobile revenue was smaller than nearly 60 percent drop in the previous quarter, but extended the losing streak of the mobile division. Growth clouds Samsung in smartphone industry suddenly stopped in 2013 as the largest iPhone models attracted buyers and Samsung mobile phones Chinese manufacturers tightened its sales in China.
Samsung April-June net income was KRW 5800000000000 (approximately Rs. 31.989 million rupees), up 8 percent from KRW 6.3 trillion a year earlier. A survey of analysts by FactSet predicted 5600000000000 KRW in net income.
Sales fell 7 percent over the previous year to KRW 48.5 trillion while operating income decreased 4 percent to KRW 6.9 trillion, in line with its preliminary results earlier this month. KRW 2800000000000 generated operating income of the mobile business compared to KRW 4.4 trillion last year.
The only bright spot came from sales of smartphones feed components. A solid performance in its semiconductor department helped reduce the overall decline in profit. Operating income from its semiconductor division surpassed the KRW 3 trillion for the first time in several years.
Samsung pinned great hopes on the edge phones S6 and S6 when introduced in April. So much so that the local media dubbed them the “phone Lee Jae-yong,” indicating that they were supervised by the president’s son of Samsung, Lee Jae-yong. He is vice president of Samsung is widely expected to succeed his ailing father.
But sales of the flagship models fell short, dealing a blow to the 47-year-old heir who is under pressure to show that it is capable of leading the technology giant consumer of Asia at a time of serious challenges.
The company was affected by two problems with its Galaxy series S6. The normal version of the phone, the Galaxy S6, was not as popular as expected, while he could not keep up with demand for the model edge S6, which has a screen that curves on both sides that is harder produce.
Research firm IDC said Samsung is the world’s largest maker of smartphones, was the first smartphone suppliers who lost market share during the second quarter, falling to 22 percent from 25 percent a year earlier only five.
Samsung executives did not give many details on whether the company adjust their mobile strategies. Their response during the earnings conference call was “innovate the hardware to lead the market in the premium segment” and “keep adding services.”
The company plans to hold an event on August 13 in the city of New York, advancing their usual product launch schedule for a month. It is widely to announce two new mobile devices expected. Samsung has celebrated the launch of new products in September in previous years.
Samsung shares fell nearly 3 percent after earnings announcement.