Samsung profits miss the mark

By on July 8, 2013

The smartphone maker says profits in the three month to June were record-breaking – but  that isn’t enough for analysts.

Is the global smartphone market finally saturated? A statement from Samsung this morning suggests as much: the Korean technology company made an operating profit of 9.5 trillion won (£5.5bn) in the three months to the end of June – below analysts’ expectations of 10 trillion won.

Before shareholders rush to panic-sell, it’s worth pointing out that £9.5tr won is still a record profit – although today, share prices have nevertheless dropped by almost 4%.

To be fair to those who have divested themselves of their stake in the company, the market value of Samsung has fallen by nearly £20bn since March. Investors have expressed worries that the company focuses too heavily on mobile phones, which account for 70% of its business, rather than other gadgets. The company launched its latest addition, the Galaxy S4, in April, and there are concerns it isn’t selling as well as hoped.

Elsewhere in the statement, company said it expects sales between April and June to have reached 57 trillion won – up by 19.8% from the same period last year.

So it’s not all bad. But the company has played second fiddle to Apple and its all-powerful iPhone for several years now, and despite almost constant lawsuits between the two, things haven’t changed. In fact, in the UK, Sony is coming up behind it, fast: having launched its Xperia Z last year, the company is now the fourth-biggest mobile phone maker in the UK.

Analysts have pointed out that Samsung’s 8.8 million UK users are more likely to switch to another brand than, say, iPhone users – although that’s a bit unfair on Samsung. The company would need a Steve Jobs-eque messiah to replicate Apple fanboys’ slavish devotion to the brand.

Still, Samsung can at least take solace in the fact that it isn’t the only mobile phone manufacturer not quite meeting expectations. Apple shares have dropped from last year’s record $700 to about $420 since last year after investors expressed worries that demand for its latest iPhone is beginning to wane.

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