The quarterly profits of Samsung fell 39%, getting to 4.3 billion $, which is three times less than the profits of its main competitor – Apple. Experts say the Galaxy S5 Smartphone model is to blame for this drop, as well as the strengthening position of Apple and Chinese brands. The company hopes for the success of the new Galaxy S6, but according to analysts, Samsung should focus on budget models.
Samsung’s net profit for January – March amounted to 4.3 billion $, which is 39% lower than the same period last year, according to the data released on Wednesday by financial department of the company. The company’s profit is lower than the expectation of experts who predicted its decline by 30%, as the Wall Street Journal stated.
#plus500stocks250x250#A number of Samsung divisions have shown moderate growth dynamics. Thus, the profits from the production of microchips was 2.7 billion $ against 1.8 billion $ of the previous year. The profits of the TV production constituted 75 million $ in the first quarter of the last year, getting to 490 million at the end of it. The department responsible for battery manufacturing has recorded a profit of 60.2 million $ against a loss of 120 million of the previous year. However, the largest division of Samsung, engaged in the production of smartphones and tablets, registered a decline in operating profits – by 57%, to 2.6 billion $. Now the Samsung share of the smartphone world market dropped from 31 to 24%.
The reason for this failure, as the experts unanimously state, is the Samsung Galaxy S5 model. The company had big expectations when it was released in April of last year, but, over the next three months, which is considered the most revealing period, the company was able to sell only 12 million models, which is 40% less than the company expected itself. Moreover, the sales in China by the end of the year dropped by 50%. For comparison, the iPhone 6 model which was released in the autumn of 2014, was sold in 61.2 million units, which is 40% more than the previous year, generating profits of 58 billion for a quarter of year. The Samsung loses its clients even in South Korean market.
The Samsung administration has already made some steps to get its mobile division out of the crisis. The head of Strategic Department of Mobile Business – Don Joo Lee, the head of the international operations – Kim Jae Kwon and the head of mobile research and development center – Lee Chul-Hwan, lost their jobs.
Now the hopes and expectations are focused exclusively on the Galaxy S6 model.