Samsung profits fall in Q1 on slowing high-end smartphone sales

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Samsung said profit fell for a second straight quarter as sales in its smartphone division continued to dip. The South Korean electronics giant announced its earnings for Q1 2014 this morning, and its operating profits for the period fell 3.3% from the year-ago-quarter.

Investors are particularly concerned with the growing trend of slumping handset sales—Samsung’s mobile division is also down 1.2% year-over-year. The just-released Galaxy S5 is expected to give its Q2 numbers a boost, but the future beyond that is less than certain…

CNBC reports:

Still, analysts say the South Korean firm’s mobile business faces a challenging year ahead.

“[The fall in handset sales] is the worry as it’s a cash cow. While we saw some encouraging signs how the Galaxy S5 may be doing in the upcoming quarters there’s obviously an increase in pressures from the price perspective as well as the marketing costs,” said Bryan Ma, vice president of IDC Singapore.

And Samsung’s mobile business faces other threats as well. Chinese-made phones are increasing in quality, putting pressure on the company’s low-end offerings, and Apple is expected to turn up the heat on the high-end later this year with a larger-screened iPhone.

“The signs that we were already seeing around Galaxy S5, frankly the comments were better than I expected. In that sense, they do have a pipeline in front of them but that’s short-term. The concern is more long-term whether they are going to have anymore real innovative products that’s going to change the world,” Ma said. 

What this all amounts to is that we’re reaching a saturation point in the smartphone market where mobile hardware companies need to start seriously thinking about their ‘next big thing.’ And I’m interested to see what Samsung, Apple, and the others come up with.

You can learn more about Apple’s latest earnings report here.