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Tuesday, 29 April 2014 12:55

Samsung sees profits fall for second time

Written by Nick Farrell



Expects things to be better next time

Samsung promised stronger earnings in the second quarter after it posted its second straight fall in quarterly profit. The company said that it expected that football World Cup in Brazil should help boost sales of screens and smartphones in the current quarter, as fans splurge on up-market devices like ultra high-definition (UHD) TVs to watch the action. Good luck with that. The lack of UHD-standard content and high prices could limit the upside for sales of premium devices from the World Cup.

A revival of sales of upmarket TVs and smartphones is crucial for Samsung to sustain growth, as its mainstay mobile business, which generated three fourths of its first-quarter profit, reported its first smartphone market share loss in four years. Its handset shipments guidance suggests there will be low single-digit growth for smartphone shipments for the second quarter. Samsung said handset shipments in the second quarter should be similar to 113 million seen in the January-March period, though smartphones such as the Galaxy S5 should make up more of the April-June shipments.

For January-March the company said operating profit fell 3.3 percent from a year earlier to $8.2 billion. Profit in the mobile division down 1.2 percent from a year earlier. The world's biggest smartphone maker is now banking on its premium Galaxy S5 handset, launched earlier this month, to outsell its predecessor and widen profit margins. Samsung posted five straight record quarterly profits until the first quarter of 2013 and is now seeing its first annual profit fall in three years.

The firm's broad range of low-end phones is being caught by the improving quality of Chinese-made offerings. Of course Apple fanboys are claiming that the company will be creamed when Apple brings out its super new innovative large screen iPhone nearly two years after everyone else, including Samsung did them.

Still Samsung, like Apple is at a loss to say where its future growth will come from and is facing competition from other rivals.

Nick Farrell

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