Samsung’s weak quarterly guidance: worst results in two years

Samsung’s weak quarterly guidance: worst results in two years

South Korean tech giant Samsung has released its second-quarter profit outlook and it is not great news for the smartphone leader.

Although the news was tipped off by a leaked company memo earlier this week, the quarterly earnings guidance is unexpectedly weak, putting Samsung on track for its worst results in two years, according to Reuters.  

The operating income of the world’s biggest smartphone maker fell around 24% in the three months ending June to 7.2 trillion won (A$7.1 billion), which is the third straight quarterly drop for the company.

As SmartCompany previously reported, Korean media is suggesting Samsung has hit a wall in terms of its smartphone growth, as Apple did in 2013.

While the overall smartphone market continues to grow Samsung’s rate of growth has fallen to below 20%, down from 39% a year earlier, with low-end devices accounting for a growing percentage of sales.

In a statement, the company blamed the result on the strong Korean currency throughout the second quarter as it appreciated against the dollar, euro and most emerging market currencies.

“The company also witnessed a slowdown in the overall smartphone market growth and saw increased competition in the Chinese and some European markets. And this led to higher inventories for the medium- and low-end smartphones,” said Samsung.

“The company cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone line-up.”

But analysts are expecting the streak of profit declines to extend into the third quarter, with Apple widely tipped to launch a successor to the iPhone 5 to compete with Samsung’s high-end smartphones, according to Reuters.

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