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Samsung has admitted it may be facing a huge drop in profits in the second quarter of 2014. In an extraordinary admission, the Korean company said it could see a slide of 24% compared to the same period last year.

Samsung is putting this down to a number of factors, not least having to spend more to promote its over-stocked, budget-priced and mid–range smartphones.

It also claims that increased competition across Europe and China is eating into sales in both territories.

China is a major sticking point, as Samsung is looking to sell old 3G inventory while consumers are holding out for more affordable 4G phones.

Coupled with the summer being a traditionally sluggish time for smartphone sales, it’s now facing the grim reality of its runaway success being severely checked.

Tablet sales are also expected to drop by as much as 11% as users snap up phablets. Here, it seems, Samsung has been a victim of its own success, having pioneered the larger smartphone form factor in recent years.

The continuing strength of the Korean Won also means that profits have been adversely affected.

Samsung says its ‘new smartphone line-up’ in the third quarter (presumably the Galaxy Note 4 included) should mean this is just a blip.

But with Apple set to pounce with the iPhone 6, there are sure to be some execs in Seoul concerned that the good times are coming to an end.

Source:

WSJ

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