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Samsung Profits Smashed 57% Decline

Samsung Profits Smashed 57% DeclineWhile Samsung’s IT & Mobile Communications (IM) division was up on the previous quarter, the division’s operating profit of 2.74 trillion won (around $3.21 billion) was down 57 per cent year-on-year.

Samsung’s net profit of 4.63 trillion won was down 39 per cent year-on-year, with revenue
for the quarter of 47.12 trillion won down 12 per cent.

Samsung has forecast earnings growth for its IM division in the upcoming quarter following the release of its flagship Galaxy S6 and S6 edge smartphones.

“The IM division earnings are expected to grow, due to increased global sales of the Galaxy S6 and S6 edge,” Samsung stated.

Samsung will be looking to the S6 and S6 edge to lead the way in turning around its smartphone fortunes, with technology research firm Gartner last month finding that Apple overtook Samsung as the number one global smartphone vendor in the 2014 fourth quarter.

“Samsung’s performance in the smartphone market deteriorated further in the fourth quarter of 2014, when it lost nearly 10 percentage points in market share,” Anshul Gupta, Gartner principal research analyst, commented of Samsung’s decline.

“Samsung continues to struggle to control its falling smartphone share, which was at its highest in the third quarter of 2013. This downward trend shows that Samsung’s share of profitable premium smartphone users has come under significant pressure.”

Rival Apple recently posted a 33 per cent profit jump year-on-year in its 2015 second quarter, driven by record iPhone sales.

Meanwhile, at the budget end of the smartphone market, consumers are being inundated with a range of Android alternatives, with manufacturers such as Xiaomi posting rapid growth in recent times.

The Wall Street Journal has reported that, according to analysts, the new S6 and S6 edge could account for as much as a quarter of total smartphone sales in the second quarter, which would likely help lift margins, with the S6 edge in particular priced at a premium to Samsung’s lower-end smartphones.

Samsung began its global rollout of the S6 and S6 edge on April 10.