Korean handset maker Samsung revealed April-June as its worst quarter in the last two years. This is the first quarter in the last two years that the company has posted such a p in earnings. Operating profit fell 24.6 per cent annually to 7.2 trillion won ($7.03 billion), suggesting uncertain earnings predictions, especially in terms of its handset business.
Samsung has been relying on its handset business for profits over the last two years. However, the numbers released for the April-June quarter are worrisome to its future growth. This is a 25% drop in profit for the second quarter due to a slowdown in the smartphone market.
Its operating profit has now fallen for three straight quarters, which highlights the pitfalls of its reliance on smartphone sales. Samsung’s growth in recent years has been powered mainly by its mobile phone division. Its profits for the mobile division fell to 4.42 trillion earned from 6.28 trillion earned a year ago, also the lowest in two years.
“The golden era of high-end smartphones is clearly over. Those were the handsets that helped firms such as Samsung make healthy profit margins,” Ajay Sunder, a vice president specialising in the telecom sector with consulting firm Frost & Sullivan, told the BBC.
To cope up, the company said that it plans to launch two new high-end smartphones in the next 6 months in a bid to twig an earnings slide and protect the company’s lead in mobile phones.