Samsung on Wednesday announced that profits during the company’s first quarter fell by a troubling 39%, dropping from approximately $7.8 billion in the same quarter a year ago to $4.35 billion during the company’s most recent quarter.
At the heart of Samsung’s drastic financial decline is a mobile division that is in desperate need of a boost. Year over year, profits from Samsung’s mobile unit fell by well over 50%, dropping from 6.43 trillion won to 2.74 trillion won, a decrease of nearly $3.4 billion.
While Samsung certainly has no problem selling smartphones, it’s no secret that the high end of the market continues to be dominated by Apple’s iPhone. So even though Samsung was able to sell more than 80 million smartphones this past quarter, there’s just not much profit to be had selling lower-end smartphones.
Driving the point home, it was estimated that the iPhone accounted for 89% of all smartphone profits this past holiday quarter.
But it may not be permanent doom and gloom for Samsung. The South Korean based company is confident that its latest fleet of upper-tier smartphones — the Galaxy S6 and the S6 Edge — will not only help bolster sales, but will significantly bolster profits as well. As we highlighted earlier in the week, demand for the curvaceous S6 Edge is much higher than Samsung initially anticipated.
Interestingly enough, the one Samsung business that enjoyed an increase in profitability, overall, was the company’s semiconductor business, the one responsible for supplying Apple, and others, with memory chips and processors.
Apple, of course, had an opposite experience this week, posting a record March quarter with $58 billion in revenue on the back of 61 million in iPhone sales, a whopping 40% increase from the company’s 2014 March quarter.