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Samsung Q3 revenues, profit hit hard by competition
2014-10-07 09:11:00| Telecompaper Headlines
(Telecompaper) Samsung said it expects third quarter revenues to go lower than expected and reach KRW 46-48 trillion and the operating profit KRW 3.9-4.3 trillion, substantially lower than in the second quarter. Samsung attributed the weaker results to declines in the mobile business and intensified smartphone competition, as well as weak seasonal demand for the CE business, including TVs. To secure growth in the mid to long-term, Samsung is preparing new smartphone lineups, with new materials and innovative designs, as well as a series of new mid- to low-end smartphones with strong competitive positioning on both hardware specifications and price. For the fourth quarter, Samsung said it cautiously expects increased shipments of new smartphones and strong seasonal demand for TV products. Uncertainty at the IM business (internet and mobile communications) will continue however into the fourth quarter. In the third quarter, smartphone shipments increased only marginally amid the intense competition, the company said. The operating margin meanwhile fell on the back of higher marketing expenses, related to aggressive promotions and lowered Average Selling Price (ASP). The lower ASP was driven by reduced shipments of high-end models, coupled with price decrease for older smartphone models. The CE business saw revenues fall while at the Memory Business, revenues improved, led by continued strong seasonal demand momentum, including PCs and servers, price stabilisation under tight market supply and demand conditions, and cost reduction thanks to improved process migration. Revenues at the S.LSI and Display Panel Businesses were pulled down by the weaker demand for mobile products.
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Category:Telecommunications