Samsung estimates yet another profit drop for Q2 of 2015

by: Edgar CervantesJuly 7, 2015
1.7K
samsung galaxy s6 edge aa 19

Samsung may still be selling most Android handsets in the world, but their numbers have been dropping earnings report after earnings report for a worrisome time. It was only recently that people were starting to become tired of Samsung’s sub-par design and build quality. Nothing was improving profits and Sammy was falling into its impending doom. In an effort to turn things around, they took their team back to the drawing board and created what would be the solution to their problems – the Samsung Galaxy S6 and Galaxy S6 Edge.

Compared to previous Galaxy S smartphones, these new flagship handsets were masterpieces of design and engineering (read our Galaxy S6 and Galaxy S6 Edge reviews). These handsets are powerful, snappy, full of helpful features and, finally, they offered a design worthy of pride. It was a new era for the Korean manufacturer and Q2 of 2015 was the quarter when they would shine… only they didn’t.

samsung galaxy s6 vs s6 edge aa (21 of 39)

Despite the release of the Samsung Galaxy S6 and Galaxy S6 Edge super phones, Samsung is estimating yet another lackluster quarter. Their earnings guidance report for Q2 of 2015 shows the company should conclude the time period with approximately 48.0 trillion Korean won in consolidated sales and an operating profit of about 6.9 trillion Korean won. This would translate to a 4% decline over Q2 of 2014.

Shall these estimations be correct, it would mean Samsung’s 7th consecutive quarterly profit drop in a row. Definitely not a good sign, especially considering this is the very first quarter report in which the new Galaxy devices are taken into account. Is Samsung’s bad reputation preceding them? Likely, but that is probably not the only factor that comes into play.

Samsung has been facing supply issues for the Galaxy S6 Edge, a phone with immense demand from consumers. We all love those beautiful Edge displays and the new elegant design – it’s likely catching a lot of people’s eyes. If Samsung can’t meet demand, we definitely have an issue at hand, and it’s reflecting in their numbers.

samsung galaxy s6 vs s6 edge aa (13 of 39)

We are definitely fans of what Samsung did with its latest high-end smartphones, but we know they could do much better (especially in the battery department). There’s a saying that goes “build up a reputation and then you can go to sleep”. Sadly, this works the same way for negative reputation. Samsung spent many years creating a fame for bad design, and long-time opinions are hard to kill. Maybe things will turn up if they continue to improve their manufacturing strategy.

What do you guys think about this situation, though? Would you say Samsung is on its way out and a new Android manufacturer is soon to take the crown? Which phone maker do you think would be the next ruler?

  • Steven

    I have an s6/edge. It is really an insanely amazing phone. Fast, gorgeous, and still as good as it was from the day I took it out of the box. I think if they keep this up with future designs they will pull themselves out of this rut. I was a Motorola user all day until the note 4. And now I’m a Samsung user/abuser. I believe that they will get more on this amazing bandwagon soon because it is so worth it! They are figuring this touchwiz and design out trust me.

    • S6andNote4isBoss

      No matter what sites say selling 45 to 50 million handsets since April is the best out of any other android manufacturer.

      Ask Lg about 7 million G4’s sold, ask Htc Who’s about fold the tent, ask pathetic Sony, Huawei, and Motorola how they feel about their financial standing on the android platform.

      At the end of the day Samsung is Android and technology nothing else matters

      • n900mixalot

        They haven’t sold that many. That is their reduced estimate for the full year. Come on, Yarrell.

      • squiddy20

        You clearly don’t know how to read. No website has ever said Samsung sold “45 to 50 million handsets” in the span of 2-3 months. Go to an optometrist and get your eyes checked.
        Also, LG’s supposed 7 million sold is more than the estimated 5 million *sold* by Samsung, since Samsung hasn’t released actual sales numbers on almost any of their phones in several years. Hmm, I wonder why?
        Edit, I also love that in this comment you say “45 to 50 million”, but in your other comment on this very same page, you claim simply “50 million”. You don’t even know the numbers enough to keep them straight between 2 comments on the same article.

  • DDT

    They deffinitelly deserve crap, for crap they do.

    iPhone 6 has alredy devoured all the money in smartphens. The galaxy as a desperate reactiom to droping profits and effort to copy the iPhone stand out fetures was bound to failure from the beginning!

    Innovative company doesn’t say one year how plastic is good, how they care for design and how removable battery and SD are “what our consumers like.” only to turn into “digital craftman” who embrace the beauty of metal and glass, wisibly salivating after capturing some Apple consumers and ignoring their past consumers, ideology with only purpose of desperately wanting profit profit profit.

    • Steven

      Do you forget the Samsung makes the flash memory and the processor for the iPhones? And come this year they will go snapdragon soc and Samsung is making their displays? You want to bark copy fine?/they copied the bottom of the iPhone ? Oh joy! What about the sides being flat and champers? What about the IR blaster? The glass back? Let’s not forget the nexus 4 ? Or the Sony phones ? They did this before or during the iPhone 4 release. You think iphone didn’t take the full metal design and antenna insulators? HTC made this design years ago! Nah iPhone innovated everything. Durr. They take everything from each other. Plain and simple. It’s just apple throwing their money in ads and bring anyone to court they can claiming they invented it!

      • truman6

        Bro, processor making is another division..do you even wanna include other items they make like fridge, cars, ships, buildings, etc?

        • Steven

          Another decision ? And that matters ? Samsung is Samsung after all. Same company same brand just down the hall is what matters ? Really ?

      • Kishore Venktesh

        Inventing is one thing, while making something popular is something different. Samsung manufactures parts for the iPhones, so does Foxconn. They just manufacture the parts based on the designs which apple provides them. iPhones dont have an exynos processor. Check your facts before you start ranting online. Besides, no matter how shitty their products might be, Apple manages to create huge profits, and thats the main thing about running a business.

        • Steven

          They design ? How in the world could you possiblely know they designed it ? You do know they use Intel chips in there computers ? Did they design these? And because they didn’t put the exynos brand on the chip makes it different? Really ? Wow…

          • Kishore Venktesh

            I didnt mention the computer, I was talking about the phone. Also, Samsung has various divisions serving different roles. I still maintain that iPhone chips are designed by apple unless you can share your source and prove me wrong. Samsung only manufsctures the chip, so does TSMC. That doesn’t mean that it is their product.

          • Steven

            You’re serious? Asking for my sources? What sources do you have to proves your arguement ?when it’s clear as day that apple makes really none of their products. Designed in California maybe on the body . but that does not go for a processor. It goes for the look. You know macbooks say this too? So hmmmm back to Intel. Whether you want to talk about them or not they are a valid point. Designed in California… Just not this Intel chip set … But shhh. It’s apple . you think with all the money in the world they would make their own chips with this design argument you have. But nope. They go to sony cameras. HTC screens so far. Samsung chipsets. Yeah… They are more software and body designs as a company.

          • Kishore Venktesh

            This is the 2nd time I’m saying this: I’m not talking about their computers. And its not Samsung chipsets… I explained it before. They just outsource their processor manufacturing to Samsung. By that logic, just because every phone is assembled in China, that means every phone is a Chinese product, not htc’s or Samsung’s or anyone else’s.

          • willytbk

            He is just too stupid to understand it, don’t waste your energy explaining to him. cheers Kishore !

    • Chris Martinelli

      They still make billions each quarter. A drop in profit from the record level profits 2-3 years ago is not like losing money. HTC is losing money. Samsung is still making massive profits.

      • n900mixalot

        It is like losing money to investors because their investment isn’t growing, it’s shrinking. Samsung has other industries that are growing and profits are increasing. So why not mobile? Because people are tired of their BS, and they aren’t the best value anymore.

  • S6andNote4isBoss

    All you guys are lost in reality They’ve sold 50 million S6 and S6Edge handset by now how that a flop.

    It’s the best handset on the android platform today especially performance wise nothing comes close to the S6, S6Edge, and S6Active

    Bottom line Apple doesn’t make phones they just like putting their name on shit others make for them.

    Without Samsung no iPhone would exist since apple needs Samsung parts for every iPhone ie Samsung processors, screens, memory, and camera parts.

    At the end of the day Android wouldn’t be worth shit if it wasn’t for Samsung.

    • Милен Стефанов

      “They’ve sold 50 million S6 and S6Edge” only in your wet dreams… And Samsung’s wishes… They won’t sell 50 million flagships this year- including S6, S6 edge, Note 5 and expected S6plus (or whatever they named it)…

      • phil osbourne

        What a complete and utter idiot you are for believing android authority these people never say a good thing about Samsung !!! If it wasn’t for Samsung android would be fucked. Now go away and read some apple drivell! !

      • it’s me tim-cock.

        Too much of tim’scock in ya mouth I see. Fool you’re on the wrong site trying pick up men. Take your ass to BGR or Cult of Mac for that.

        • Милен Стефанов

          Just go to suck some negro’s dick…

    • Samsung had hoped to sell 70+ million GS6/GS6E in all of 2015. That was tempered down to 45 million as they moved the goal post of “success”. Biggest delusional post of the day: “They’ve sold 50 million S6 and S6Edge handset by now how that a flop.”

      Thanks for the chuckle. BTW: Samsung is just a piece parts manufacture for Apple like LG, Sony, TSMC and dozens of other contract houses. All simply making parts to Apple’s designs.

    • squiddy20

      Yeah? And what’s your source on those numbers? Oh right, you make up “facts” to fit your delusional Samsung fangirl complex. Every tech website has speculated no more than 15 million shipped (usually more around 10) with actual units sold around the 5 to 7 million mark.
      And since you obviously still don’t get it, Samsung is just one of quite a few parts manufacturers/suppliers. The only difference is that Samsung is able to keep up with Apple’s demand and QA. Nothing more than a business transaction. What a joke.

    • it’s me tim-cock.

      50 million galaxy s6 have sold to date? Sir im a samsung guy, but that’s a stretch.

    • n900mixalot

      Wrong on so many levels. Those are estimates for the whole year, not for shipments since April. I’d actually blame you for about 100 or so lost sales. You tend to give Samsung a bad reputation with your constant extremism.

    • Sherpa

      Samsung also counts “distribution to carriers” as sales. This does not necessarily mean sales to final customers.

    • Sherpa

      Haha, I just saw your comment “Without Samsung no iPhone would exist since apple needs Samsung parts for every iPhone”. You don’t think Apple would go for another vendor or fab the parts on their own? By the way, without Apple, you would still be using shitty Samsung phones from the 2000s.

      • abazigal

        There’s a very good reason why Apple keeps going back to Samsung for parts though. Samsung is probably the only company in the world capable of supplying parts to Apple in both the quantity and quality Apple desires.

        • Sherpa

          There is no doubt that Samsung creates good parts for Apple, but, if Samsung didn’t exist, Apple would go other routes or even design/build on their own.

          • velu

            Apple design the most important part , SoC. Samsung is just a fab manufacture for them.
            If not samsung they goto TSMC. Same applies for other hardwares that they get it from samsung.

    • abazigal

      There’s no link between the two. Just because you can make quality mobile phone parts doesn’t necessarily mean you have the expertise to put them together into a package which results in a great user experience for users, much less entice them to buy your wares. Specs are merely a means to an end, not an end in itself.

      I can be a great farmer capable of growing the juiciest vegetables, but it doesn’t mean I know how to cook them properly.

    • velu

      What are you smoking man ?
      Samsung might not even sold 20 million S6s by now.

  • HotelQuebec

    Not everyone is willing to spend on the best which is clearly the S6 if you walk into any phone store with rows of phones on display. Most people are content with a mid end or even a good low end like Moto G or iPhone 6.

    • thereasoner

      This is true, you do get a great experience now a days even from a decent midrange. The tech has really matured, you don’t have to spend on a flagship to get a quality device now.

      Also on Samsungs plate is having to compete with decent sized screens on iPhones for the first time, growing competition from bargin Chinese manufacturers and the fact that the Chinese government continues to block Google services in the largest and fastest growing market in the world hurting Android sales in the process.

      That said, from what I’ve read this current decline has more to do with spending unnecessarily on parts for the regular S6 and having a surplus of them while simultaneously not having enough to satisfy demand for the edge variant. Apparently they are both selling at the same rate while Samsung was planning 1 in 4 sales going to the edge model.

      • charlesarthur

        “and the fact that the Chinese government continues to block Google services in the largest and fastest growing market in the world hurting Android sales in the process.”

        AOSP sales in China haven’t been affected by the blocking of Google services, which has been in place for years and so can’t have had any effect on these numbers. The market in China has slowed down, but that’s a tech maturation effect as you referred to. Also, Apple has been able to capitalise on offering a larger screen for the first time, and so taken some sales.

        • thereasoner

          Personally I think all Android OEMs , including Samsung would see improved sales in China if Google and the Chinese government could resolve their differences.

  • thereasoner

    Another report attributes the decline to over ordering parts for the regular S6 and as a result an unnecessary stockpile while simultaneously coming up short on S6 edge parts and not meeting demand. “Insiders” say that the edge is selling at the same rate as the regular S6 while Samsung was expecting only 1 in 4 sales to be the edge variety.

    Frankly, I’m surprised too. I never thought the edge would sell nearly this many. Just goes to show just how much of a priority people put on a new fresh design ! That’s alright for Samsung though, the supply / parts order issue should sort it’s self out in the following quarter and they’re still rolling in the dough. Now, about those other Android OEMs……

    • abazigal

      I think it also goes to show how vastly underrated Apple’s mastery of the supply chain really is, that they can manage a global rollout of the iPhone 6 and still accurately meet demand (more or less). However good a product you have is moot if you can’t get enough out there to sell to consumers.

      • thereasoner

        Apple always come up short at launch but many do say that the shortages is just marketing hype.

  • StrikkerXX

    Well Samsung has saturated the market so much, not everyone who owned a previous Galaxy device may want to upgrade just yet. It’s a situation where Samsung has to directly compete with Apple users for their money, and convincing them to make the leap is hard.

  • ClaytonGRodriguez

    vvcvvccv

  • NatashaDKahn
  • ClaytonGRodriguez

    vccvcv

  • hoggleboggle

    Ah, more Samsung bashing from AA. Considering they managed to sell as many S6 as Apple did iPhone 5 (A fair comparison seeing as the level of variance to the previous models on both is about the same) I would have said this was quite impressive in such a crowded market.

    • charlesarthur

      How many S6s were sold, and what’s your source?

    • velu

      Apple sold 5 million iPhones in a weekend ( 3 days ) , but it took 20 days for samsung to sell 6 million S6s.

  • Wean Irdeh

    If only Samsung and another android OEMs can get rid of stupid patents from Microsoft…..

  • Whatever1234

    Where are all those people who stated the S6 would outsell the iPhone (yeah right). *Crickets*

  • Whatever1234

    This proves one thing, Android users are cheap. That’s why Apple gets apps first, because they spend more money on them.

  • techieland

    Samsung would not be in this situation if they controlled their end product even after the carriers purchased them, dump ALL the bloatware, unlock bootloaders, release the kernel/code, sdcards, removeable batteries, and allow the Android experience to shine while running on great hardware and they will be back at the top like the good old Galaxy S2 days

    • abazigal

      I don’t think the majority of consumers really care for stuff like unlocked bootloaders, whatever that even means.

      • techieland

        the reason i ask for that is because the all the power users desire that, when they are happy about a product it just creates more of a buzzword about the product, look at the amount of custom rom users.

    • velu

      Samsung needs to differentiate its phones , otherwise users would buy one plus one rather than s6.

  • Tandem0

    YOY slight profit decline is caused by budget and mid-ranged phone market which has been flooded by Chinese manufacturers recently, that’s it. Those markets are not the same. Hint: look at the position of Samsung in China this year compared to last year, for example. Samsung high-end phone market are doing just fine globally. Isn’t it quite obvious? I’m not saying the profit decline is a good thing, but trying to blame S6 for this is just faulty.

    • velu

      Mobile shipment is more or less same for the last two years but profits declined drastically.
      This is a clear sign that samsung high end version is taking a beating.

  • Kevin Smith

    Very simply solution: destroy Apple by enhancing innovation and delivering higher end devices: e.g. 4K display, 48HR+ Battery Life on Maximum Settings/Maximum Usage, plus Quick Charge from 0% to 100% in 30 minutes or less, Internal Storage: starting at: 128GB, 256GB, then 512 GB or even 1 TB. 8GB RAM, 64-bit or even 128-bit computing CPU. Eliminate Blotware. Setup own stores across worldwide, offer 24x7x365 support, offer next-business day repair / replacement. Offer something like AppleCare+ , but for fraction of the lost ($99 vs. $45 as an example, increase its value for money: 2-YRs support vs. extending to 3-YRs or 4YRs)

    • Sherpa

      My sarcasm radar detects your post as a sarcasm. I hope I am not wrong.

  • Md Yousuf Khan

    If Samsung follows the same strategy as of now. then surely Samsung will be the next ruler in smartphone.
    And the real competitive will be Xiaomi as its a fast growing in smartphone business.