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Worst Quarterly Profits in Two Years Prompt 200 Samsung Managers to Return Part of Bonuses

July 18, 2014 - Written By Cory McNutt


Samsung is not a happy place right now – the world’s largest smartphone maker is wheeling in self-doubts brought on by another quarter of lower than expected sales and profits.  The second quarter profit figures are about to be released and it will be the lowest quarterly profits in two years – don’t feel too sorry for them as they still are expecting to post a substantial operating profit of $7.1 billion, although down a healthy 25-percent from a year ago when it reached $9.4 billion.  We will have to wait until July 31 to see the breakdown of exactly how the smartphone division itself did, but it is not expecting to look good.

In, what is a common gesture in the South Korean business community, our source was told that about 200 managers at Samsung Electronics Co Ltd’s mobile division have voluntarily given back a quarter of their bonuses as a sign that those managers will work harder towards obtaining Samsung’s goals.  The local media estimates that amount to be in the neighborhood of 3 billion won, or about $2.92 million…which will also slightly lessen the losses in the mobile division.

The world’s largest smartphone maker is facing both a slower market growth as parts of the world that purchase their high-end devices are starting to become saturated as well as increased competition from China.  In years past we looked to Samsung for innovative design and quality products, however, LG, in a couple short years, has gone from selling low-midrange devices to selling quality high-end products and really pressuring Samsung to come out with a ‘homerun’ type device – the Galaxy S5 was not that device.

Not only on the high-end devices, but also in the emerging markets, such as India and China, companies such as Lenovo, OnePlus, Oppo and Xiaomi are now offering feature-rich smartphones at a very competitive price, far lower than Samsung.  This is taking a large chunk of business away and it is finally starting to show in Samsung’s bottom line.  A researcher, Counterpoint, in a study of 35 major global markets showed that during the month of May the almost year-old iPhone 5S outsold the new Samsung Galaxy S5 – not a good sign.

What amazes me is the fact that these managers are getting bonuses at all – with sales in the mobile division doing so poorly, you wonder why they would be receiving a bonus in the first place…a bonus for what? Please hit us up on our Google+ Page and let us know how you feel about these bonuses and Samsung’s lackluster performance…as always, we would love to hear from you.