SEOUL-Samsung Electronics Co. said net profit for the second
quarter fell 8% as sales for the company's flagship Galaxy S6
smartphone fell short of market expectations, hurting profits.
Net income for the three-months ended June 30 was at 5.75
trillion Korean won ($4.9 billion), down from 6.25 trillion won in
the year-ago period, the company said in a statement Thursday. The
decline was the fifth straight quarter to post a year-over-year
profit decline, as low-cost rivals from China and India continue to
weigh on Samsung's market share and profit margins, particularly
for midrange smartphone models.
The mobile unit saw its operating profit slide 37.6% to 2.76
trillion won in the second quarter.
Analysts estimate the average selling price for Samsung's
smartphones to have dropped by more than 10% to below $300 in the
latest quarter compared with a year ago, in tandem with heightened
cost competition from low-cost rivals in the region. Apple Inc.,
meanwhile, managed to keep a high price tag on its iPhones during
the same period, with the average selling price of iPhones rising
by more than $100 to $662.
Samsung's smartphones are expected to stay prone to further
price cuts as the South Korean electronics giant struggles to
differentiate its products from the growing pool of competing
smartphone models.
In an attempt to cushion the continuing slide in earnings,
Samsung has advanced the timing for the launch of its flagship
smartphone/tablet hybrid device, likely called the Galaxy Note 5,
by about three weeks from its usual launch period.
The chip business was the biggest contributor to the company's
bottom-line, with operating profit for the unit soaring 82.8% to
3.4 trillion won.
Write to Min-Jeong Lee at min-jeong.lee@wsj.com
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