Samsung today issued pre-earnings guidance for its upcoming third quarter and projected an operating profit of $3.8 billion off of nearly $43.9 billion in sales.
As Reuters points out, Samsung’s profit guidance represents a 60-percent drop year-over-year and falls well short of analysts’ estimates of $5.2 billion.
Samsung is pegging the third-quarter slide on a decline in mobile business due mostly to increased smartphone competition. The hit to Samsung’s mobile revenue also adversely affected its OLED and S.LSI businesses.
Samsung said its smartphone shipments saw a small uptick but its operating margin fell as a direct result of “marketing expenses related to aggressive promotions and lowered ASP (Average Selling Price) driven by reduced proportional shipments of high-end models coupled with price decreases for older smartphone models.”
The company also lent some of the blame to weak seasonal demand for its consumer electronics division.
Looking ahead to the fourth quarter, Samsung said its IM business is still uncertain but cautiously forecast an increase in sales for its new smartphones and for seasonal demand for TVs to help offset its slumping mobile business.
Samsung said it’s preparing new smartphones using “new materials and innovative designs,” while also readying a series of new mid- to low-end smartphones to compete on specifications and price.
The company’s plans for lower-end devices comes to light as Chinese smartphone vendors like Huawei and Lenovo are eating into Samsung’s leading global smartphone shipments share.
Samsung was also forced to release its new Galaxy Note 4 in China earlier than planned in an effort to stay ahead of Apple, who recently entered the phablet market, long dominated by Samsung, with the release of its 5.5-inch iPhone 6 Plus.
Filed Under: Infrastructure