Last week it was reported that South Korean analysts were predicting low sales for the tech giant in regards to the newly launched Samsung Note 4 and Note Edge. In short, analysts were predicting both devices would only accumulate 11 million unit sales (9.5 million for the Note 4 and just over one million for the Edge) before the year ended. This was being seen by the industry as rather disappointing and especially if compared to the release last year of the Galaxy Note 3 which sold a similar level and number of devices. With the release of a newer and better device it would be expected that sales would increase from last year but according to the analysts this is not expected to be the case.
To make matters worse for Samsung, South Korean Analysts are now also reporting that Samsung should brace themselves for their lowest Quarter sales since the beginning of 2012. Originally it was expected operating profits for the third quarter (July-Sep) would be around 6 trillion Won, roughly $5.8 billion. However, the analyst at IBK Securities are now revising this number suggesting Samsung’s profits will be somewhere much closer to 5 trillion won ($4.8 billion). Although $5 billion sounds pretty good, to put this into perspective the second quarter of this year was the first time in eight quarters Samsung’s operating profits had dropped below 8 trillion (7.2 trillion Won, $6.9 Billion). This war largely due to what was seen as the underperforming of Samsung’s Galaxy S5 and sent the first shockwaves through the industry. With this in mind, if the operating profits do further drop from 7 trillion down to the now-expected 5 trillion this really will be a worrying issue for Samsung.
The drop in profits is largely being seen as an extension of the general poor performance of sales for the Korean company. As well as the operating profits hitting a long-term low the same analysts also expect the overall number of sales to be significantly impacted for the third quarter. IBK Securities again predict the overall sales for this quarter could fall as low as 49 trillion Won. This is further being echoed by analysts form BS Securities and Samsung Securities who predict overall sales to hit 49.8 and 50.5 trillion Won respectively. As for the reasons why Samsung is facing such a downturn, it is worth noting it is not all Samsung’s fault. One of the main reasons given is the unexpected rise and popularity of other Chinese manufacturers who are now targeting the lower end price brackets which in turn is ebbing away at Samsung’s foothold in the market. Not to mention the impending release of the new iPhone 6 Plus which for the first time is expected to compete with Samsung in the phablet market is also likely to have an effect. Either way, it does not look like a good end to the year for Samsung.