Samsung has an ugly stock chart for the past three months, dropping almost every week. And investor sentiment received confirmation as the South Korean company posted its most recent numbers.
Source: courtesy of Apple Inc.
South Korean tech giant Samsung Electronics Co Ltd (005930.KS) on Tuesday guided for weaker-than-expected second-quarter earnings, as a supply shortage plagued its latest smartphone launch and tepid demand from key markets likely undercut sales.
The guidance suggests that Samsung, while on a gradual recovery path, will struggle to replicate the explosive growth it recorded at the turn of the decade as smartphone competition intensifies and demand softens in China and Europe.
Operating profit for the second quarter likely fell 4 percent from a year earlier to 6.9 trillion won ($6.13 billion), Samsung said in a filing, its best profit in four quarters but also the seventh straight period of annual decline.
The news agency opined that slow production of the new Galaxy S6 could make its sales fall behind those of Apple Inc.’s (NASDAQ: AAPL) iPhone 6 and iPhone 6 Plus, sales of which have reached extraordinary levels.
Samsung’s problem benefits Apple for two reasons. By all indications, Apple production has met demand. Its well-managed supply chain has made certain of that. At the same time, demand for the iPhone 6 has been strong across all major markets. Apple management repeatedly said that China sales hold the key to the iPhone’s success. Most analysis shows that the huge consumer electronics company has met that goal and future sales in China are likely to match the present pace.
Samsung took the leader’s position in smartphone sales from Apple three years ago and held it for over a year. The iPhone 6 introduction and late to market launch of the Galaxy S6 helped reverse that trend, and Samsung will not get that edge back, at least for the foreseeable future.
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