Samsung Electronics Co Ltd on Tuesday said it is on track to post its second straight quarter of profit decline, as slowing smartphone sales growth continued to weigh on earnings.<\/p>\n
The South Korean tech giant estimated that its January-March operating profit fell by 4.3 percent to 8.4 trillion won ($7.96 billion), slightly below an average forecast of 8.5 trillion won by 40 analysts polled by Thomson Reuters I\/B\/E\/S.<\/p>\n
The world’s biggest smartphone maker is counting on the fifth version of its flagship Galaxy S smartphone, which goes on sale globally from Friday, to right the ship and prove the firm’s staying power as a mobile innovator.<\/p>\n
But the Galaxy S5 has already got off to a weak start at home, with its South Korean debut marred by a temporary ban on mobile carriers selling handsets and criticism that it lacks eye-catching new features.<\/p>\n
Underscoring the challenges, Samsung priced the S5 about 10 percent cheaper than the S4 even though main rival Apple Inc is not widely expected to update its line-up until September. It also dialed back on marketing glitz to keep margins stable.<\/p>\n
Analysts said the company’s efforts to rein in component costs and make products that appeal to a wider audience will be crucial as Samsung braces for what could be its first annual profit decline in three years.<\/p>\n
“What Samsung needs to do this year for additional growth are things like cost reduction and reducing marketing costs,” HMC Investment and Securities analyst Greg Roh said.<\/p>\n
“In some sense, Samsung has no way to prevent a decline in its earnings without improving internal efficiencies.”<\/p>\n
Samsung estimated its first-quarter sales at 53 trillion won, compared with a market forecast of 54.58 trillion won. Full quarterly results are likely to be announced by April 25.<\/p>\n
Shares in Samsung closed up 1.2 percent on Monday prior to the earnings estimate announcement.<\/p>\n
The stock is nearly 12 percent off the record high hit in January last year, weighed by worries over high-end market saturation and competition from cheap Chinese rivals.<\/p>\n
Samsung profit slips as smartphone sales slow<\/a><\/strong><\/p>\n Samsung drops 5 percent on weak earnings outlook<\/strong><\/a><\/p>\n Is Samsung\u2019s $14 billion marketing push working?<\/strong><\/a><\/p>\n