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Samsung profits take a dramatic dive

Samsung has announced that its Q3 profits will be down dramatically on the same time last year.

The South Korean tech giant has released its earnings guidance for the third quarter of 2014, and is predicting operating profits of around 4.1 trillion Korean won – that’s around £2.3 billion.

Compare this to last year’s figures, and it represents a massive dip of around 60 percent.

This can largely be attributed to disappointing smartphone sale, from which the company traditionally derives around 60 percent of its profit. This year’s flagship phone, the Samsung Galaxy S5, hasn’t sold as well as hoped, while the eagerly anticipated Samsung Galaxy Note 4 won’t ship in time to have an effect on the quarter’s figures.

Meanwhile, Samsung is experiencing stronger than ever competition from both ends of the smartphone market. At the top end, Apple has launched its two biggest (in every sense) iPhones ever, both of which appear to be finally engaging with the large-screen phone market that Samsung has had a near monopoly on in recent years.

At the entry level of the market, a whole host of Chinese companies like Xiaomi are churning out cheaper Android smartphones of a good standard – another section of the market Samsung has dominated in recent years.

Of course, Samsung’s key advantage is that it has its fingers in multiple pies. Its lucrative memory chip business, for example, is thriving, and profits are expected to exceed those of its phone business some time later this year.

Read More: Samsung Galaxy Alpha review

Via: WSJ

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