Future dims for Samsung after poor quarterly earnings
South Korean iRival tweaks strategy for turnaround as growth continues to slow
Investor confidence in Samsung Electronics was further shaken today as the smartphone market leader reported its worst quarterly profit in two years and expressed uncertainty in future earnings, Reuters reported.
The market responded by pushing down the South Korean giant's stock price, which shows signs of its sharpest decline in almost eight months.
Samsung said it projected third-quarter smartphone shipments to increase by 10% from Q2 as the company prepares to launch a premium smartphone. But Samsung is feeling the pinch from rivals in all categories, with its premium model, the Galaxy S5, outsold by Apple's iPhone 5S and budget devices hit by Chinese competitors. The company will also need to ensure that its forthcoming phablet offering, the Galaxy Note 4, outperforms Apple's iPhone 6 range, which is expected to include a large-screen device.
Samsung's market-winning strategy of bring multiple products to market may be starting to flag, as the firm also announced its intention to produce a reduced range of products and pursue more aggressive pricing policies. As a result Samsung projects a lower average selling price for the third quarter.
"Considering intensifying competition of price and specifications as well as the release of new competing models, it is difficult to expect earnings to improve from the second quarter," senior vice president Kim Hyun-joon told analysts during a conference call.
In a sign that Samsung is serious about a quick turnaround, its mobile division executives gave back a quarter of their bonuses for the year to date and downgraded to economy seats for short-haul flights.