Samsung Shares Drop on Sales Despite Forecasting Profits

Jaycee De Guzman July 7, 2013 0

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In 2012, the South Korean Firm has shared their quarterly profits of 47%. However, analysts feared that Samsung Electronics would face saturated markets. According to the spokesperson of the company, despite the forecasting, the company would report a profit 9.5tn won for the second quarter, exactly up 47%. But the fall on the Seoul stock market has reported nearly 4%.

New Samsung Galaxy S4

The new Galaxy S4 comes with a changed body style. It has metallic sides and straighter edges, compared to a more rounded and plastic Galaxy S3. Both S3 and S4 are fast and come with quad-core processor technology. However, the display is better on Galaxy S4 since it has a full HD pixel resolution of1080x1920. Other added features include Smart Pause that uses a sensor in order to pause the videos every time the viewer looks.  It also has a dual shot that takes pictures using both the rear and front cameras simultaneously.

The Release of New Samsung Galaxy S4

Two months after its release, the new Galaxy S4 was announced to be shipped. The shipment will be around 20m. The Samsung Galaxy S4 has started out strong sales. Within 27 days of selling, it sells approximately 10 million units. But, according to the analysts, the shipments of second quarter are lower than expected.

Samsung Shares Drop on Sales Despite Forecasting Profits (2)

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The Market Saturation of Smartphones

Analysts are concerned that like Apple, Samsung would face saturation in the progressive world since ownership of such Smartphones has been rampant already in many countries. Both US and Europe countries are the average Smartphone users. They have been reported to head towards 60%, leaving only small quarters of new buyers who are willing to upgrade their Smartphones. Operators for mobile networks are cutting subsidies, thus making high-end phones very expensive. According to Seo Won-seok, the Korea Investment & Securities analyst, the sales of the new Galaxy S4 would weaken.

The Fastest Growth

China is the fastest growth and is said to be progressive due to the low cost offer in Smartphone in a highly competitive market. Samsung has released a low-end version of S4 to become a constant player in the market against its rivals, Huawei and ZTE. It was the figures of Samsung Galaxy S4 that market saturation was reflected. Even though the sales on its first release were twice as high compared to last year’s Galaxy S3, the 20 m shipments is a sign of drop sales.

The Dominance and the Analysts

When it comes to the featured phone and Smartphone, Samsung still dominates the business.  Google Android software, this giant South Korean Company took about 95% of profits. Analysts suggest that the high cost of marketing, which is believed to be the first time in 3 years, has hit the profit despite the strong record of sales in the first month. According to the Nomura Financial Investment’s analysts, CW Chung, marketing costs is the greatest factor of telecommunication business. Due to the high marketing costs, telecommunication businesses would probably be weakened as expected. The improvements of Semiconductors are evident only in the previous quarters.

For a total quantity of Samsung Galaxy S4 for shipment, analysts have cut their figure from 80m to 60m. According to Neil Mawston, the Strategy Analytics’ executive director, while Samsung has suffered Galaxy fatigue, its greatest rival Apple has also suffered an iPhone fatigue. This statement was relayed to Bloomberg, right before the financial announcements.

When it comes to mobile growth, Samsung is reliant. During the first quarter this year, the making of the devices as well as the selling of tablets, mobile phones and cameras have been reported to contribute 75%. Analysts surveyed that out of 75%, 60% come from mobile business.

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