AH Samsung Logo 4.1 May 31 2014

Samsung’s Profit from Mobile Devices Sees a 15% Drop in Q2 2014

July 31, 2014 - Written By Syed Sofian Rabbani

When it comes to mobile devices, Samsung has no competitor when it comes to the sheer number of devices the Korean manufacturer manages to sell. However, volumes may not always make for an excellent financial story. We saw this recently when Samsung declared a less than stellar financial profit for the second quarter running. The company has declared a 15 percent drop in operating profits, which now stand at 7.19 trillion won (approximately USD 6.97 billion). This has been the worst quarterly performance for Samsung in the last two years and the company says that prospects aren’t looking too good for the second half of this year as well. This drop in operating profit was pummeled especially by a drop in the mobile and IT arm of Samsung Electronics, which showed a maximum drop of 31 percent quarter on quarter, to 4.42 trillion won. In Q1, the company’s operating profit was reported at6.43 trillion won.

Samsung states that an appreciation of the Korean currency is to blame for reducing their operating profit by 0.5 trillion won, as well as expenditures on marketing for their mobile devices segment. Samsung’s latest flagship in the iconic Galaxy S series – the Samsung Galaxy S5 – has had sales pressures piling up on account of stiff competition from the launch of the Apple iPhone 5S in May and from the HTC One M8 which was launched earlier. Samsung sold an estimated 95 million smartphone devices and 8 million tablet devices in the second quarter, however now analysts and tech enthusiasts alike will look forward to what the Korean manufacturer does to stem this slide. Senior Vice President for Samsung Mobile, Hyunjoon Kim, has said that the company is planning for a new model and will also look into moving towards more premium build materials – rather than the much-criticized plastics to ensure a differentiation between their premium and general-range devices. It is expected that Samsung will launch game-changing features with their next iteration in the Note series – the Samsung Galaxy Note 4 – in September this year. But the trillion won question here is, will the Note 4 stem this slide in profits for Samsung? Tell us what you think in the comments below.