Analysts Predict Samsung's Operating Profit Dropped In Q2

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According to several analysts cited by Reuters, Samsung's profits for the second quarter of the year are expected to drop compared to Q1 2018 on account of relatively poor smartphone sales, although Samsung's successful chipset business should mitigate some of the losses. While sources expect Samsung to publish an operating profit higher by 5.7 percent compared to a year ago, analysts predict that the company won't be able to surpass the 15.6 trillion won, or $13.9 billion in operating profit registered at the end of the first quarter of the year. As a result, analysts foresee Samsung's operating profit for the second quarter to drop to 14.9 trillion won or the equivalent of $13.3 billion.

Although the Samsung Galaxy S9 series appears to have contributed to higher operating profits in Q1 2018 following its market release in March, analysts suggest that sales figures of the latest flagship have dropped throughout the April-June period, and this will lead to a decrease in the overall operating profit at the end of Q2 2018 compared to the last quarter. Some analysts attribute this to the relative success of the iPhone X which may have attracted more customers through its unique hardware, arguing that although Samsung's devices provide a rich software experience, they don't necessarily push the boundaries of hardware design to new limits. This could have made prospective buyers more reluctant towards paying a premium price for a Samsung flagship, with the Samsung Galaxy S9 having been launched for around $720, and its larger sibling – the Galaxy S9 Plus – being attached to a launch price of around $840.

Additionally, analysts believe that Samsung is now facing stronger opposition from Chinese smartphone brands who not only tend to offer handsets at lower prices but usually also conduct their business through online channels where Samsung's presence is lacking. According to data shared by research firm Strategy Analytics, Samsung had a market share in China of only 1.3 percent in Q1 2018, whereas OEMs including Huawei, OPPO, Vivo, and Xiaomi have all registered double digits. Samsung is expected to disclose the details of its market performance for Q2 2018 near the end of this month, so it remains to be seen whether or not these predicted operating profit figures will stick.

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