Samsung’s Second Quarter Profits Expected to Decline

According to market analysts, there will be a decline in Samsung’s second quarter profits for the second consecutive quarter because of the slow smartphone sales that were seen in the April to June period. On Friday, the market analysts stated that the slowing down performance of the mobile business unit of the South Korean giant was the primary reason why profit was going to dip in the second quarter. Almost sixty percent of the total profit of the company is attributed by the operating profit of its mobile division. An analyst said that even though the second quarter would see an increase in profits from consumer electronics, display and semiconductors businesses, the mobile business unit would report a decline.

This is primarily because of the lackluster sales reported for tablet computers and mid-range smartphones. It was projected that the firm would record a profit of $7.8 billion in this quarter, which is down from the profit earned in the same quarter the year before. Similarly, there would also be a decline in sales as opposed to the figures of last year. Financial reports have recently been released by investment and securities firms and have made forecasts about the expected profits of Samsung Electronics for the second quarter of 2014.

As per the estimates, the earlier predictions concerning the company like 10 trillion won worth of profit would turn out to be false and the South Korean firm will only have a profit of 8.5 trillion won instead. It is also said that the profit margin of the smartphone giant has also eroded because of the disappointing sales of its latest flagship smartphone, Samsung Galaxy S5. Another analyst reported that previously it had been predicted that Samsung Electronics would ship a total of 83 million units in the second quarter of this year, but the actual figures would actually be around 77 million units.

It was also asserted that the market share of the South Korean giant in the global smartphone market was 34% in the first quarter, but this would drop down to 30% in the second quarter. However, it is expected that the profits of the company would see a boost in the third quarter because the company would launch the Galaxy Note 4, its new high-end tablet as well as other electronic gadgets and wearable devices in particular. Moreover, the chip business, which is quite robust, mainly because of DRAM, will also be beneficial for Samsung and will give the firm an opportunity to improve its profits and quarterly sales.

Analysts have predicted that in the third quarter, the operating profit of the company would reach 9.1trillion won, leading to total revenue of 58.8 trillion. However, accurate figures can only be seen in the second week in July when the company will publish its preliminary financial statements. These statements will show an accurate summary of the actual revenue and operating profit that the company has earned in the second quarter of this year amidst the saturation in the smartphone market.