Samsung's CFO said that the company's second-quarter earnings are "not that good," according to multiple reports. The surprisingly frank comments likely reflect weakness in Samsung's mid- and low-end smartphone sales in emerging markets, and put a damper on the company's April release of its flagship Galaxy S5 Android smartphone.
Samsung CFO Lee Sang Hoon's statement was first reported by South Korean media and then later confirmed by the company, according to Bloomberg. Samsung, which makes smartphones along with a range of other electronic devices, is expected to report preliminary second-quarter results as early as next week, and then could post its full financial results next month.
According to the Wall Street Journal, KTB Investment & Securities in Seoul lowered its forecast for Samsung's second-quarter operating profit by 10 percent on news of the CFO's comments. KTB also lowered its predictions for Samsung's Q2 smartphone shipments by 12.5 percent due to what the firm said was weak demand for Samsung's mid- and low-end smartphones in emerging markets like India and China.
"Samsung is experiencing fierce competition from emerging vendors," tweeted IDC analyst Francisco Jeronimo. He wrote that the firm expects Samsung's smartphone shipments to be flat from the same quarter a year ago and down from the 88 million Samsung shipped in the first quarter of this year.
The results are particularly noteworthy since Samsung in April released its Galaxy S5 phone, and in May the company said it sold 10 million units of the S5 within 25 days of its global release--beating the previous record it set with the S4.
Samsung, which does not report its quarterly smartphone shipments, likely shipped somewhere between 88.5 million and 89 million smartphones in the first quarter, earning a 31 percent share of the smartphone market, according to Strategy Analytics. The firm said that was Samsung's first annual market share loss in the smartphone category since the fourth quarter of 2009, largely due to threats from the likes of Huawei, Lenovo and LG Electronics, which are grabbing more market share and are starting to loosen the grip Samsung and Apple have on the market.
In the first quarter, Samsung reported a dip in its operating profit and relatively flat sales, year over year. Samsung's operating profit fell 3.3 percent year over year to $8.2 billion.
Perhaps in a bid to boost its smartphone business in the United States, Samsung earlier this month announced it hired executives from BlackBerry (NASDAQ:BBRY), Nokia (NYSE:NOK) and Disney to boost its position in the enterprise market, networking and content.
For more:
- see this WSJ article
- see this Bloomberg article
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