The launch of the iPhone 6 and cheaper phones from China took a heavy toll on Samsung’s profits from its Galaxy phones, the smartphone giant revealed today.
Samsung said that it expects third quarter profits to have fallen by 60 per cent to around 4.1 trillion won, which is well above analysts’ forecasts of 5.6 trillion won.
That would be the lowest quarterly profit for more than three years. Phones account for some 70 per cent of its sales.
“Smartphone shipments increased marginally amid intense competition,” Samsung said. “But the operating margin declined due to increased marketing expenditure and lowered average selling price.”
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But the company revealed it is “preparing new smartphone line-ups featuring new materials and innovative designs, and a series of new mid-to-low end smartphones.”
Its shares actually rose slightly on investors’ hopes that this might be the bottom of the profits slump, having sold off older model phones.
Although Apple did not launch the iPhone 6 until mid-September, analysts said that Galaxy sales were hit in anticipation of its release.
OUTLOOK: Forget the bad press – Apple’s still calling the tune
It’s become de rigueur to trash Apple every time the American tech giant launches a new product.
There have been bad reviews, reports of bendy handsets, and other problems. Then there was that dodgy U2 album that became an unwanted guest in millions of people’s iTunes accounts when it was given away, plus a worm that reportedly attacks the iOS operating system. A bad few weeks for Apple, then.
The strange thing is, none of it has stopped iPhones from flying off the shelves. If you want one, expect a lengthy wait (I’m still waiting). Meanwhile, it is Apple’s great rival Samsung that has issued the profit warning, despite the rave reviews its top-range Galaxy has had from users.
While Samsung struggles to cope with the assault from the iPhone from above, and cheapie Chinese smartphones from below, Apple is walking on water again, at least from a financial perspective. And throwing its rotten cores at its critics.
James MooreReuse content