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Samsung Flags Q2 Profit Drop Amid Speculation Over S6 Supply Shortage

Samsung Flags Q2 Profit Drop Amid Speculation Over S6 Supply ShortageIn releasing its earnings guidance today, Samsung revealed it expects to post operating profit of around 6.9 trillion Korean won (around $8.15 billion) for the quarter, down 4.2 per cent on last year’s corresponding quarter.

Samsung, meanwhile, expects its revenue for the quarter to total around 48 trillion won, down 8.4 per cent year-on-year.

The figures come as Samsung battles to retain smartphone market share.

Gartner figures released at the end of May revealed that while Samsung was the top smartphone vendor by unit sales for the 2015 first quarter, that it continued to see an erosion of its market share, which declined from 30.4 per cent to 24.2 per cent year-on-year.

With the figures applying to the period prior to the release of the S6, attention had turned to the extent to which Samsung’s flagship offerings, in the form of the S6 and S6 edge, could bolster its smartphone fortunes.

The S6 and S6 edge were released in the second week of April.

The Wall Street Journal has reported that while Samsung had initially expected to sell four S6 smartphones for each S6 edge, demand was much likely closer to even for the two devices, citing a person familiar with the matter.

The oversupply in turn led to unsold Galaxy S6 devices, in particular white-coloured devices, and not enough S6 edge smartphones, the WSJ reported the person as stating.

Samsung subsequently reconfigured its manufacturing operations to cater for market demand for the S6 edge devices, according to the WSJ’s source, who said sales and profit figures could pick up again in the third and fourth quarter.

With Apple performing strongly at the premium end of the market on the back of its iPhone 6 and 6 Plus, and the likes of Xiaomi gaining market share at the budget end of the market, Samsung faces intense competition across the scope of smartphone categories.

Samsung’s earnings forecast does not break down its expectations for each unit of its business.