Samsung Corporate HQ (image 001)

Samsung today issued its earnings guidance for the second quarter of 2014, and in somewhat of an odd move, it attached a note to the document explaining why it will fall short of estimates. The company expects to see its profits drop for the third consecutive quarter.

The note details a number of factors, including the improving strength of the Korean won making exports more expensive, and exceedingly sluggish tablet sales. It also explains that it is running into greater competition in China from low-end device makers like Xiaomi…

From Samsung’s 2Q Earnings Guidance: Reference Material document via The Wall Street Journal:

The earnings forecast is the result of 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. […]

With the release of new smartphone devices in the second quarter, Samsung launched various promotions to reduce existing inventories in sales channels and this increased the company’s marketing expenditure compared to the previous quarter. The weak demand for smartphones also affected the System LSI and the display businesses that provide key components and screen technologies. 

Samsung adds that it “cautiously” expects a more positive outlook in the third quarter with the coming release of its new smartphone lineup. It also anticipates better performance from its display panel/component businesses, as competitors look to ramp up production this fall.

Known for its ability to fill every niche in the smartphone market, Samsung is in a bit of a foreign position right now. Competition in the low-end is heating up thanks to makers like Xiaomi and Lenovo, and it’s about to lose its grip on the premium 5-inch+ market thanks to Apple.

Apple is scheduled to reveal its Q3 2014 earnings on July 22nd, and it’ll be interesting to see what kind of numbers it puts up. Because both it and Samsung, as well as other manufacturers, are going to soon start running into a much broader problem of smartphone saturation.

  • CoolJRT

    Haha, brilliant!

    • Kenrick Fernandes

      is it brilliant to see competition report low figures?

      • CoolJRT

        Um, yeah…

      • RarestName

        Why?

      • Kyle

        Samsung says they’re better than Apple but they aren’t

      • abazigal

        It’s called “You reap what you have sown”.

        Samsung chose to flood the market with all manner of mobile devices; they chose to prioritise market share over long term profitability. It was clear right from the start that this sort of momentum could not be sustained – technology simply does not advance quickly enough for you to be updating 2 flagships every 9 months.

        So in the end, Samsung got what they wished for. They have made their bed, now they get to lie in it.

      • Daniel Gillespie

        100% correct.. when you throw the everything at the wall and sit back and watch what will stick and only a certain % of what you do makes you a profit, your sooner or later going to have problems.. excellent point. Then people criticize Apple especially and MS for taking their time…. could be the reasoning is showing up finally.

      • jack

        grow up kid

      • RarestName

        ???

      • BoardDWorld

        I’ll love the day HTC are doing better than Samsung’s rubbish again. They have had 5 good years thanks to copying Apple’s 3GS. It’s just incredible how many sheep blindly buy their incredibly cheap products vs what HTC put out(If your really want an alternative).

        It’s like buying lead that’s painted a little like gold to make you feel good.

  • Kyle

    If you are producing shit, of course you cannot sell it lmao.

    • Found the fanboy

      • TechLove

        Found a paid college girl with explanations on what this really means.

      • Kyle

        Yaaaay 100 extra credits!

      • jack

        hey darling how much for a bj

      • Dan

        … you must be real popular with the ladies

    • they are so damn shitty, they give them away when you buy a ne HD TV Set…

  • Dave

    Most people are too busy working or hugging the wall to find time to give samsung their money

    • Latino Sin Zero

      Lol

    • Kurt

      Lol

      • BoardDWorld

        That must have made you feel better after reading todays results 😉

      • Kurt

        Not a fanboy so it doesn’t hurt my feelings. I can and do laugh at Samsung a lot.

  • TechLove

    Funny how that works!
    Samsung results tank, and their stocks rise. Apple reports record results, and their stocks tank.
    *Stole the text from a 9to5mac reader.

  • H M

    Both Giggle & Shamesung ARE DOOMED ! LOL
    YOU TWO DESERVE IT !!!!!!
    From The Height to Hell

  • Матт Реякіпѕ

    I don’t think people understand how Samsung works. First and foremost almost all of Samsung’s phone sales are the lower end models, the ones they lose money on. They rely on their higher end phones such as the Galaxy S and Note to make money. The reason they’re failing to meet expectations is to get people to buy their higher end phones they gotta put them on sale to get people to buy them. For instance the S5 was on sale with Verizon as a buy one get one free promotion before it was even officially released. And then carriers started selling it for $99 with contract rather than the sticker price of $199 with contract. Almost all the S5 sales have been when they were on sale this is why they are losing money.

    Also what people don’t realize is Samsung doesn’t sell near as many high end phones as they lead their customers to believe. They use units shipped and compare it to their competitors units sold. The reality is you can ship 10 million phones and not sell a single phone. So units shipped really means nothing unless you sell as many as you ship which Samsung doesn’t. If you look around you will see at least 100 iPhones per Galaxy S phone sold. So the reality is Apple sells a great deal more iPhones than Samsung sells Galaxy S phones but they ship almost as many Galaxy S phones as Apple sells iPhones.

    • chris125

      Except Samsung sells the phones to carriers at full price so no matter what sales carriers put on, it doesn’t effect Samsung. Carriers make the subsidy back up through your 2 year contract

      • Матт Реякіпѕ

        You’re wrong about that. I know a guy who works for wireless carriers and he will tell you that the phone makers tell the wireless carrier when they can run promotions with their phones and when they can’t. And they sell the phone to the wireless carrier for a discounted price so the wireless carrier doesn’t lose profits on it. And honestly the only way a wireless carrier would voluntarily discount a phone is if they can’t get people to buy it. No wireless carrier is gonna take a profit cut on a phone unless the phone isn’t selling and they need to get rid of it.

      • chris125

        You’re wrong. Carriers make money off contract, they never lose money on subsidy and pay full price. Why do you think carriers hate you buying full retail? Because all their money comes from upgrades and contracts

      • Матт Реякіпѕ

        How can I be wrong? I know a guy who works for a wireless carrier. You don’t. You’re spewing off what you want to believe. And look at it this way you never see an iPhone reduced in price before it’s released do you? So why would you think Verizon would choose to release the S5 on sale before release date yet not the iPhone 5s? Even a discounted S5 won’t outsell the iPhone 6 when it comes out.

      • Stuart King

        ‘I know a guy’ isn’t evidence, get him to post comments with name and credentials.

  • ✪ aidan harris ✪

    Here’s the TLDR version;

    Samsungs Q2 earnings are falling short because they can’t compete with their competitors and can’t appeal to consumers resulting in lower tablet sales.

    • Kurt

      If they made a 12 inch win 8 tablet I’d buy it but 12″ Android tablet? No thanks

  • Technocrz!

    Happiness on its height. Shamesung you gotta pay for your sin with these loses.

  • Dan

    The fanboy responses are hilarious. They are just phones, to each his own. I prefer Apple products but I don’t get pleasure from the fact that competitors are going through hard times.

    • N&LH

      Could be because their strategy is not really correct. Samsung used to release x number of devices with different prices and sizes for each category every year. For example, they have 7 inch, 8 inch and 8.4 inch tablets. I think they can have only 8 inch and discontinue 7 and 8.1 inch.

      • Dan

        No doubt, they are making bad business decisions.

        I just find it odd to see comments like ”I hate Samsung soooo much” or ”Both Giggle & Shamesung ARE DOOMED ! LOL”.

        I mean come on, it’s just a company. Unless Samsung ran over your dog, you might be overreacting.

      • I mean come on, it’s just a company. Unless Samsung ran over your dog, you might be overreacting.

        I hate to bring this up but Samsung is a Korean company. They’ve probably ran over many dogs and eaten them for dinner at a later date…

        (For the record I’m aware that what I’m saying is stereotypical so please don’t take this comment seriously

      • BoardDWorld

        It’s simply because they are a dirty company. I was saddened to hear HTC trading lower than Samsung after the later produced their S1 which is simply and truly an iPhone rip-off.

    • Latino Sin Zero

      Exactly my point. These my my thoughts on a hundred. My preference? Apple, but how can ppl jump for joy when competitors fail at sales or go bankrupt? Sickening

      • N&LH

        This is Samsung faults, they need to figure out why this is happening then they should come up with strategy to solve this issue

      • Guest

        They got apple copying them now so they are doing something’s right.

      • N&LH

        “copying “..copying what ?

  • Arsanny Lintang

    The only reason that I like apple computers (not iPhones) is I can’t download PC games so I can concentrate on my studies!.

    • Nuno Xavier

      Let me introduce you to Steam, an application where you can download many awesome games, both PC and Mac versions. You’re welcome

      • Arsanny Lintang

        I already know about steam for about 10 years and I’m still using it, but I don’t see games such as COD BATTLEFIELD or any other FPS franchises supports the Mac version… I know they have a couple of COD games but I already finished it and it’s no fun playing all over again when you know the story

      • BoardDWorld

        Search for CrossOver. I have no problem playing all my favourite PC games on Mac without any performance loss vs playing it on Windows.

  • GuyBey0ndC00L

    I believe Samsung sluggish sales is there own making. There like 10 different version of the S5 and Galaxy tablets, Why.
    There even Galaxy S5 Prime, thats better than the original S5, Why. Soon the Galaxy F will be out, Again Why.

    All that money wasted on manufacturing so many different models. Sammy slow down with the copy and paste effect.

  • credulousgeek

    hahhah samsung you deserved it because there is no innovation by far in any of your tablet sold in the market I own a tab 4 but i am seriously not satisfied pissed waiting for my ipad mini to arrive soon honestly speaking samsung can beat apple if they stop copying and start employing best researchers and engineers Long live Apple

  • blastingbigairs

    I actually recently went from a 5s to an S5 and am really enjoying it. It’s got its issues, but overall it’s a decent device. I will obviously go back to an iPhone when the 5.5″ 6 comes out, but for now I’m happy with my Samstunk.