Samsung's profit to dwindle in second quarter of 2018

Samsung's profit to dwindle in second quarter of 2018
Samsung is due to post its guidance for the second quarter of 2018 on Friday, but the information it will most likely contain is no secret.

Continuing the trend from this year's first quarter, smartphone sales are expected to drop even further, following the first quarter's 2% drop.

Experts point out two main reasons for the unsatisfactory results of the company that can be categorized roughly as an external and an internal one.

The blame for the internal one, of course, falls solely on Samsung. Their latest releases failed to make people excited for their products, which naturally hinders sales. While the Galaxy S9 and S9+ were objectively better than their predecessors, many consumers and specialists alike thought the upgrade was marginal and decided to skip a generation. Now Samsung is hoping to shake things up with the release of the new Galaxy Note 9, but if leaked information about the device is to be believed, the Note line is matching the progress path of the S-series, as in: expect no jaw dropping new features. Considering that the Galaxy Note is already a niche high-end device, Samsung executives might end up disappointed once more at the end of the year.

What doesn't make Samsung's situation any better, is that they are challenged by competitors on all fronts. Apple's flagship device, the iPhone X, despite sporting the controversial notch, continues to sell well even when put against the competition's 2018 top models. Meanwhile Chinese tech giants Huawei, Oppo, Vivo and Xiaomi are not only dominating the Chinese market, but are starting to get traction in the west, nipping away from the market shares of well-established manufacturers.

All that said, don't feel bad for Samsung just yet (as if you were). It still holds the number one spot for smartphones sold a year, and while its mobile division might be underperforming, the chip manufacturing part of the company is more than making up for it. Profit from chips is expected to rise 50% compared to last year and is now responsible for almost a third of Samsung's revenue. And with demand for their silicon products staying strong, these results are expected to be repeated.

While Samsung definitely has things to work on, it takes more than a slower quarter to disturb a company of that scale. Hopefully, once the right cogwheels start turning, we'll see some truly inspiring products.

source: Reuters

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70 Comments

1. mayur007

Posts: 593; Member since: Apr 10, 2012

The way they are launching 1000 diff models. Yet high price and providing less value for money product they will go even lower. Samsung is not what it was before.

29. redmd

Posts: 1872; Member since: Oct 26, 2011

1000 different models? You mean Huawei Oppo Vivo and Xiaomi.

37. perry1234

Posts: 619; Member since: Aug 14, 2012

I agree, except flagship models , all others are not worth buying compared to something like Asus.

2. obedchuni

Posts: 307; Member since: Jun 16, 2014

I don't know how even after selling and being on the number one spot for smartphones sold a year, its still bleeding money....Guess note 9 might bring luck to them.

71. ColinW

Posts: 412; Member since: Jun 04, 2014

Samsung is not bleeding money, it is highly profitable.

3. ALMBO6

Posts: 195; Member since: May 28, 2018

They haven't been treated their customers well. Their products are too expensive nowadays and offer the lesser value for money when compared to the competition, plus slow updates. Very disappointing!

5. TechSceptic

Posts: 1156; Member since: Feb 05, 2018

What a bunch of rubbish. Samsung is by far the company that listens the most to their consumers, unlike other companies who completely ignores them and forces them to conform to what they want, instead of the other way around. Additionally, Samsung's doesn't force as large profit margins as other companies, such as Apple, which results in Samsung's smartphones offering more for less than brand such as those. Obviously no one in the entire world can compete with Chinese brands, as their slave labour is as cheap as it gets. They have essentially no rules to live up to compared to other brands in other countries.

8. maherk

Posts: 6645; Member since: Feb 10, 2012

Yes they do listen to their costumers, but their products are overpriced. If Apple didn't release a $1000 iPhone, Samsung wouldn't have had the balls to price the Note 9 and S9+ at almost 1000 dollars as well. You can defend them as much as you want, but the S9+ and Note 8 shouldn't habe cost more than $800.

20. TechSceptic

Posts: 1156; Member since: Feb 05, 2018

Their products are overpriced? The Galaxy S9+, which is their newest flagship, cost 840$ at release. How is that nearly 1000$? Furthermore, if the Galaxy S9+ is overpriced, then the iPhone X is monumentally overpriced, as that is actually 1000$. So, if the Galaxy S9+ shouldn't have cost more than 800$, then by that logic no other flagship smartphone should have as well. The Galaxy S9+ is only 40$ off the 800$ mark, while the iPhone X is 1000$ off.

24. maherk

Posts: 6645; Member since: Feb 10, 2012

The S9+ was priced at $900 and more depending on the market, maybe in the US it was cheaper, but that wasn't the case around the world. Here in my country, where the average salary is around 550 dollars, the S9+ was released for $970, and it was a huge reason why it flopped where usually Samsung phones dominate the market. And your fanboyism is affecting your sight, as I clearly pointed out that the iPhone X was also overpriced.

41. TechSceptic

Posts: 1156; Member since: Feb 05, 2018

The Galaxy S9+ was released for 840$ in the US by one of the carriers, so that is what you could buy it for at release. Yes, the Galaxy S9+ is more expensive in other markets, but so is every other smartphone from any popular brand, as the US is simply cheaper than most of the world. The price difference between Samsung smartphones in the US and Europe isn't as large as the price difference between Apple products. Apple excessively hikes up their prices in Europe. The iPhone X cost 1400$ at release in my European country, which is insane, as it definitely isn't worth remotely that much. If you can't afford something as premium as the Galaxy S9+, then you can simply buy one of the many more affordable smartphones that Samsung offer. If you only get a 550$ salary, obviously you can't afford the most premium smartphone from the most popular brand, it's stupid to expect otherwise. You could also buy from another brand. If you're okay with the way chinese firms do business, which is by essentially using inhuman working conditions and generally doing business in a way that would be illegal in any western country, then you can buy from them.

47. NateDiaz

Posts: 1082; Member since: Mar 03, 2018

Put that dollar sign before the number ffs and stop talking about US price you ain't buying that s**t from America.

26. Trex95

Posts: 2315; Member since: Mar 03, 2013

Samsung released S8 plus and note 8 almost 900+ before iPhone X released even. You guys always blame Apple for each and everything wrong goes with android!

35. sissy246

Posts: 6907; Member since: Mar 04, 2015

But that's your opinion. I gladly paid a little over 900 for my note 8 and I love it. I could say the same about the iX , in my opinion it wasn't worth 1000+. Anything is worth what you are willing to pay.

54. maherk

Posts: 6645; Member since: Feb 10, 2012

Well, sales numbers are an evidence that majority of people find the new prices for flagships are absurd. Mark my words, two years from now, Samsung will go back to their old pricing. Why do you think they were throwing out all these deals on the S9 few weeks after it's release?

69. Trex95

Posts: 2315; Member since: Mar 03, 2013

Used all of these phones sissy and I would tell you one thing don’t like it about smaller size than iPhone 8 Plus know that it’s 18.9 aspect ratio. Now a days I’m using S9 plus Exyons waiting for iPhone X plus and mayabe S10 Plus.

70. BLUEBLASTER

Posts: 905; Member since: Feb 23, 2014

I dread to think what the S10 will cost.

9. midan

Posts: 2487; Member since: Oct 09, 2017

"Additionally, Samsung's doesn't force as large profit margins as other companies," You still continue repeating this same nonsense, everybody knows that everyone else than those chinese companies takes very big profits from their phones (many of them starting to take it too). You have to please shareholders and run a company. If you have had high prices you can't go down with them, you need to keep making profits like you used to. Samsung is rising the prices because they know they sell less and less but they need to try to do profits with less sales. Shareholders won't like these results, Samsung share this year is already 9% down.

21. TechSceptic

Posts: 1156; Member since: Feb 05, 2018

"You still continue repeating this same nonsense, everybody knows that everyone else than those chinese companies takes very big profits from their phones (many of them starting to take it too). " You're just trying to downplay the fact that Apple takes significant higher profit margins than Samsung. The Galaxy S9+ and Iphone X both cost about 375$ to make, yet Apple sells it at 1000$, while Samsung sells their Galaxy S9+ at 840$. Apple's profit margin is 34% higher than Samsungs, as a result. So stop acting like everyone apart from the Chinese companies are identical, it's simply wrong and ignorant. Apple's product are objectively speaking more overpriced. You're an ignorant Apple fanboy with no grip on the reality of things concerning Apple. "Shareholders won't like these results, Samsung share this year is already 9% down." Have you actually looked at Samsung's share? They're doing absolutely fantastic these last 3 years. From 2012-2016 it was consistently around 25000 KRW. It then rose from 25000 KRW in 2016 to around 48000 KRW in 2018. It has been hovering around that number for a year now, so there is an upward trend in general, not downward. They essentially doubled the value of a share within a few years.

4. Marcwand3l

Posts: 381; Member since: May 08, 2017

Good thin Samsung is not that dependent on smartphone sales. The impact of reduced smartphone sales on their final profits will be minor.

14. midan

Posts: 2487; Member since: Oct 09, 2017

"The impact of reduced smartphone sales on their final profits will be minor." Samsung share is already down 9% this year. Shareholders won't like this, it's very alarming If they can't turn direction with their smartphones and they very likely can't.

16. TechSceptic

Posts: 1156; Member since: Feb 05, 2018

Edit: It's midan, it's not worth it. He will always call everything Samsung does shit and spread doom and gloom over anything Samsung does.

18. midan

Posts: 2487; Member since: Oct 09, 2017

"Yes, because Samsung and everything Samsung does is s**t, according to Midan. I can find quotes of you saying things like that if you want" then find those? Because i've never said that, it's funny how you talk this crap about me everytime in your messages. Last time i actually said i'm sure S9 is actually great phone, but it's just not enough for current market because phone market is so competitive now and the price is way too high for what it offers. It's the fact which you clearly can't handle.

23. TechSceptic

Posts: 1156; Member since: Feb 05, 2018

"the price is way too high for what it offers." It offers more features than any other mainstream flagship smartphone, so this is just a ridiculous thing to say. You clearly haven't even owned it or used it properly for a longer duration, as seen by the fact that you believe it to be a great phone, but don't really know for sure. i'm sure S9 is actually great phone" The iPhone X doesn't even offer half as many features, options, freedom and cuztomization. Furthermore, while the iPhone X offers less, it's actually even more expensive, and considerably more expensive. You know this for a fact as well, so you're only response will be "hurr durr IOS", "Apple Apple Apple!".

31. midan

Posts: 2487; Member since: Oct 09, 2017

"The iPhone X doesn't even offer half as many features, options, freedom and cuztomization." If this is what people want Nokia would be number one currently. But it's never been like that, only for few Android boys who think everyone wants long feature and specs page or freedom and customization. I don't know anyone who have customized their Android phone. They look exactly same like when they bought them and i'm now talking about average users.

42. TechSceptic

Posts: 1156; Member since: Feb 05, 2018

Ah yes, people dislike the concept of having the freedom of choice. They obviously want someone like Apple to force them into using their specific products and nothing else, because that's what's really consumer friendly! (sarcasm) Furthermore, i made the comment about features, options and freedom of choice because you said the following about the Galaxy S9/S9+: "the price is way too high for what it offers" I then stated the fact that the Galaxy S9+ offers more than just about any smartphone on the market, so it's a ridiculous thing to say that it doesn't offer enough for the price, when the iPhone X offers even less at a much higher price. "I don't know anyone who have customized their Android phone." Personaly anecdotes as proof, as per usual with you. This isn't evidence, period.

43. midan

Posts: 2487; Member since: Oct 09, 2017

Hey i'm still waiting those quotes you claimed to have about me

46. midan

Posts: 2487; Member since: Oct 09, 2017

Why you compare it to iPhone X? iPhone X is not main enemy for Samsung, it's those chinese companies who are selling basicly same experience with half a price and that's why S9 is too expensive to compete and sales pretty much proves it.

19. midan

Posts: 2487; Member since: Oct 09, 2017

Stop talking s**t about me.

34. sissy246

Posts: 6907; Member since: Mar 04, 2015

LMFAO Oh no, should he be scared.

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