Samsung-Logo-AH17

Samsung In for Another “Bad” Quarterly Earnings Report?

April 5, 2016 - Written By Alexander Maxham

Samsung, who is the largest smartphone maker (with Apple not far behind), has been posting some pretty bad quarters in the past year or so. Now for any other manufacturer, these numbers would be fantastic. But for Samsung, they are less than stellar. Last week, CNBC actually noted that Samsung had shipped about 10 million Galaxy S7 units (it was not specified whether that included the Galaxy S7 Edge as well), and many began to speculate that Samsung would have a fantastic Q1, seeing as the Galaxy S7 and Galaxy S7 Edge launched in the beginning of March, giving them almost a month to sell these two flagships.

There are a couple or reports coming out of South Korea this week stating that the earnings for Q1 may not be as great as expected. One report is stating that the Display arm for Samsung is going to have a much wider loss than expected. The loss was expected to be about $174 million, but now it looks as if it could be as much as $521 million. Keep in mind that these are reports, and not official from Samsung. The other report, and perhaps more important for Samsung, is that their sales in China are still falling. In 2013, the company made 40.15 trillion won in China. In 2015, they tallied sales of about 30.98 trillion won. That’s around a 10 trillion won decrease in just two years. With the current currency rate, $1 USD is equal to about 1,155 Korean won. So while 9.17 trillion won sounds like a big number, in reality it’s actually much lower. That’s close to $8 billion that Samsung has lost in sales in just two years. Seeing a decline of 22.8% in the last two years in China. Samsung’s overall sales decline was 12.3% for the same two years. Additionally, Samsung dropped to fourth in market share in China with 7.7% in 2015.

Samsung is not alone in seeing sales decrease in China. With the amount of competition in China, many of the global players – LG, Sony, HTC, etc – have seen their sales decline in China. Perhaps the only one to see less of a decline is Motorola, and that’s due to their owner Lenovo being from China. There is a ton of competition in China right now, with manufacturers like Xiaomi, Meizu, Elephone, ZUK, and many others leading the charge there. Not only are they putting out great devices, but they are also putting them out much cheaper than what Samsung can do. Largely because their products are entirely made there, so it’s cheaper to sell.

Guidance for Q1 2016 is slated to come out from Samsung on Thursday, April 7th. So we should know a bit more from Samsung later this week and see how bad of a quarter they are expecting. This will just be guidance for the quarter, as it’s a bit too soon to put out earnings for that quarter, seeing as it just ended on March 31st, 2016.