Samsung Profits Drop by 39% Due to Increased Competition

The financial results for the first quarter ending March 31, 2015 for Samsung Electronics have been finally revealed. Interestingly, the company has recorded a sixth consecutive quarterly fall in its profits courtesy of the fierce competition it faces from its rivals in the smartphone industry. The difference truly reflects when you consider the results posted by Apple that show record quarterly earnings.

The financial results for Samsung show net profit worth of 4.63 trillion won (nearly $4.35 billion) which translates to a sharp decline of 39 percent. Besides falling well short of 7.49 trillion won worth of net profit last year, this figure falls short of analysts’ expected figures as well as Samsung’s own operating profit forecast worth of 5.9 trillion won.

Net profits for Samsung dropped by 39 percent and fell short of analyst expectations as well as the company’s own projections

The revenue figure also seems to have taken a hit as it declined by 12 percent to 47 trillion won. The company hasn’t revealed exact sales figures for smartphones as per past practice but it claims to have sold 99 million handsets in total during the first quarter. Despite 80 percent of these being smartphones, the revenue in the mobile division nosedived by one-fifth along with operating profit falling to 2.7 trillion won compared to 6.43 trillion last year.

In spite of posting poor results, Samsung is hopeful for a comeback in the second quarter. It is heavily banking on the new Galaxy S6 as well as Galaxy S6 Edge in order to turn the tide. In addition, it is hoping that India and China will increase the demand for Samsung’s smartphones in the current year despite competitors like Micromax and Xiaomi.

The company sold 99 million handsets but revenue from mobile phones dropped by 20 percent

Moreover, Samsung has plans in place to turn its attention to fresh technologies like wireless charging and semiconductor business with a focus on memory chips sales. Speaking of the semiconductor business, it has experienced enhanced profit margins as evident in the 28.5 percent increase in the past quarter in contrast with 20.8 percent increase recorded last year. If reports are to be believed, Samsung will be supplying new processor chips for use in the next Apple iPhone.