Despite the continued expansion of Samsung’s enormous international footprint, the company’s CFO Lee Sang Hoon says second quarter earnings for 2014 are going to be “not that good.” Bloomberg reports that Samsung is expected to post an operating profit of 8.4 trillion won ($8.2 billion) for the quarter, a significant slide from the record performance of 10.2 trillion won in Q3 2013.
“Strengthening competitiveness of local players in emerging markets are hurting sales of Samsung’s lower-end smartphones,” said KTB Investment & Securities analyst Jin Sung Hae. “The main reason behind the lowered earnings estimate largely stemmed from weak smartphone sales.”
Sales of Samsung’s Galaxy devices are being hampered by tough competition from both the budget devices that have congested the international market and high-end smartphones, most notably the iPhone. Earlier this month, Samsung reportedly cut its Galaxy S5 orders in anticipation of the iPhone 6, knowing that many customers will be holding out until Apple announces its new phone.
Samsung is depending on the performance of its other product lines, including televisions and memory chips, to lessen its dependence on a mobile division which currently generates over 75% of the company’s total earnings. A preliminary earnings report is expected as early as next week. With the iPhone 6 right around the corner, Samsung will need to do more than release new models of the same phone to woo new customers.
