Samsung Profit Forecast Looks Weaker Than Expected
The world’s biggest mobile phone and television maker, Samsung Electronics, has forecast that their profits for the April to June quarter were much weaker than expected. They have estimated an operating profit of around $9.5 trillion for the quarter when most analysts had expected a figure that was much closer to the $10.1 trillion mark.
In recent years, Samsung has seen considerable success in the smartphone market – the popularity of its Galaxy range actually saw the company replace Nokia in 2012 as the world’s biggest mobile phone manufacturer. Research firm, Strategy Analytics, says that Samsung actually accounts for 95% of the profits made in the Android smartphone sector.
Even so, there have been concerns in recent weeks that Samsung’s smartphone growth is slowing, which is a trend that will eventually hurt their profits. These concerns have been triggered by a number of reasons, the main ones being the launch of new products from rival manufacturers and the release of relatively low-cost smartphones from Chinese companies.
Jeff Kim from Hyundai Securities said “one of the biggest risks for Samsung Electronics going forward is that 70% of total operating profit comes from mobile business.” Whilst many believe that diversification will be key to their comeback (especially in the form of wearable devices), others believe that this will only be enough to complement profits.
“The problem is no one is sure whether these products can really wow investors and consumers,” says Jung Sang-jin, fund manager at Dingbu Asset Management.