Samsung’s net income plunges as smartphone competition heats up

Samsung released its first quarter results and, in spite of the launch of its flagships, the Galaxy S6 and S6 Edge, it is not looking great for the South Korean company.

It’s worth noting though that it might be too early to the results of the two flagships. Samsung of course expects to see strong mobile demand.

The first quarter results show that Samsung’s net income has plunged by 39%. The company reported that its first quarter income was 4.63 trillion won (US$4.35-billion), compared to 7.49 trillion won one year earlier.

Sales were down by 12% from a year earlier to 47.12 trillion won while operating income dropped by 30% to 5.98 trillion won.

Samsung income statement

The company said its mobile division accounted for 2.74 trillion won in quarterly profit, compared with 6.43 trillion won a year earlier.

With the Galaxy S6 and S6 edge having launched earlier this year, Samsung’s sales should pick up and improve in the second quarter. This will, perhaps, not beat Apple’s second quarter results but at this point, Samsung will not be doing itself any favours by trying to compete with Apple.

According to analysts, Samsung might have sold more smartphones than Apple during the quarter but it began to lose its share in the high-end market after the launch of the iPhone 6 and 6 Plus — devices that directly challenge Samsung’s roam in the smartphones models with bigger screens. This was also pointed out in a report by International Data Corporation, in its latest report on smartphone shipments to the Middle East and African market.

Where Samsung is performing well is in its component division of its business, which climbed to 28.5% this quarter compared to 20.8% a year ago. The company supplies chips and displays for makers of smartphones and televisions, including Apple.



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