Samsung expects a drop in operating profits for the second consecutive quarter

Samsung expects a drop in operating profits for the second consecutive quarter
Samsung announced on Tuesday, that it expects to report its second consecutive quarter with a decline in operating profit. For the three months ended March 31st, the Korean company is expected to report that Q1 operating profits declined in a range of 2.1% to 6.6% from a year earlier. For the prior three month period, the Korean tech firm announced a 6% drop in operating profits. That was the first year-over-year decline in Samsung's operating profits in two years. Analysts blame the lower earnings on the competition in the smartphone market that has dropped the average price for Samsung's smartphones.

Samsung estimates that its operating profit will range between 8.2 trillion won to 8.6 trillion won ($7.8 billion to $8.2 billion USD) for the first quarter. Sales are forecast come in between 51 trillion won and 55 trillion won  A year earlier, Samsung reported an operating profit of 8.78 trillion won on sales of 52.87 trillion won.

Led by strong smartphones sales, Samsung's operating earnings peaked in the third quarter of last year at 10.2 trillion won. The Korean tech titan spent 12.2 trillion won in marketing expenses during 2013, compared with 10.9 trillion won in 2012. That high level of marketing to revenue cannot be sustained, which is why Sammy is cutting back on that ratio this year.

Samsung does not report estimates of net profits, and will report final earnings numbers at the end of this month.

source: WSJ

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15 Comments

1. mr.techdude

Posts: 571; Member since: Nov 19, 2012

Samsung is picking up the mistakes off HTC, like what I predicted that thus might happen.

2. nctx77

Posts: 2540; Member since: Sep 03, 2013

The band aid won't help. Initial sales will be high due to the (s)heep, but will fall off a cliff after a month or two.

8. MEeee

Posts: 426; Member since: Oct 19, 2011

Too bad it still will sell more than all the high end 2014 Android phones combined.

3. jeeta444

Posts: 154; Member since: Mar 24, 2014

samsung should expect more drop in operatiing profit for the whole 2014 year.. ..!! because Z2 is gaining attraction among the people.....and moreover , Z2 beats up the nokia 808 in camera test and have become the new camera King in overall performance... http://mblog.gsmarena.com/sony-xperia-z2-tops-the-dxomark-mobile-photography-rankings/

5. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

I try out Sony Z2 notice the screen is not as sensitive as it should. Could it be the new crush resistance glass that it use?

9. Tizen007

Posts: 575; Member since: Jan 07, 2014

Jeeta444 : Don't bring up Sony. Sony is not a direct competitor to Samsung. You need to be at LEAST LG sales level to be a direct competitor to a company that sells that amount of phones. Spec wise GS5 kills Z2 not in terms of "numbers" but pure technology. If G3 comes out with an IP67 certification and with current rumored specs Z2 is basically screwed.

11. therons

Posts: 59; Member since: Feb 25, 2014

r u kidding? Spec wise GS5 kills Z2? can you mention "that"? pure technology? lmao....explain it. Sony is never mention to be number 1. target is number 3 on global market. and last bu not least..sony handset is premium unlike cheapy plastic copy cat Samsung. got it? Z2 rules over GS5. but if you prefer Samsung..just go ahead...your "Taste"

12. Tizen007

Posts: 575; Member since: Jan 07, 2014

I bet you haven't even bothered to read all the GS5 tech articles that flooded PA for a few days cause you have a "luxurious taste" towards glass material. Yes they are aiming for 3rd in the market AND THAT'S WHY I said the number 5-6 Sony cannot be compared to the NUMBER ONE smartphone manufacturer. If you are arguing that the level of technology is solely based on higher numbers you have to go learn how technology works before going with Z2 "..."

7. jellmoo

Posts: 2588; Member since: Oct 31, 2011

Unless Sony can actually get the Z2 to market, on many carriers, and with wide distribution, it's quality won't matter much. Sony has a very solid device on their hands, but their problem is one of execution.

4. spiderpig2894

Posts: 597; Member since: Jan 10, 2012

The decrease of Samsung's profit gives way for Samsung to put the other phone's "selling point feature" to their own flagships and market it heavily.

6. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

I always find Alan F. name on 99% of anti Samsung article. Another 99% on pro Apple article. Lol! So funny.

10. ecmedic4

Posts: 520; Member since: May 02, 2013

Um please explain to me how this article is anti-samsung? The article simply is reporting on the decline in operating profits that samsung themselves are expecting, and it does not contain any negative jabs at samsung.

13. geordie8t1 unregistered

Its no surprise really, but once the s5 hits markets en mass their numbers will grow, almost all companies are starting to show slight stutterings in their earnings, why? Well for one thing these numbers are thought up by analysts who by their very nature are paid to simply try and guess the market based on previous figure and predictive statistics, it also shows that overall mobile phones markets are almost in saturation in every genre of phone, be it high mid or low range models, all companies will have blips, its how they go about sorting them out, apple had this very issue about 2ish years ago, sony have came through it also a few years ago and HTC are still struggling to find their feet, along with Blackberry who are all but a distant memory, much like nokia nearly was.....

14. gigaraga

Posts: 1454; Member since: Mar 29, 2013

They usually expect lower profits when in fact they maybe gaining more as they usually do

15. Arte-8800

Posts: 4562; Member since: Mar 13, 2014

s5 will make ss more in 2nd qrtr

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