Samsung Warns Of Disappointing Sales

Mobility
Samsung Galaxy S6
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Poor Galaxy S6 and S6 Edge demand and high iPhone competition combine for underwhelming sales forecast

Samsung has warned that its next quarterly earnings are likely to miss analysts’ expectations amid speculation that the flagship Galaxy S6 smartphone has failed to ignite the growth hoped for by the company.

The figures are the latest sign that the Galaxy S6, intended to draw new interest from consumers following lacklustre sales of last year’s predecessor, the Galaxy S5, may have failed in its task.

Demand

SamsungThe company may also have underestimated demand for the Galaxy S6 Edge, which features a curved screen that wraps around the device, leading to missed sales on a higher-margin product, industry analysts said. Samsung has said it added manufacturing capacity to address this issue.

Samsung has said it expects the combined sales for the S6 and S6 Edge to set a new company sales record.

The company said in a regulatory filing that operating profit for the quarter was likely to fall by about four percent from the previous year to 6.9 trillion won (£3.9bn), short of the 7.2 trillion won forecast on average by analysts, according to Thomson Reuters. Revenue for the quarter is likely to reach 48 trillion won, Samsung said.

The figures represent a seventh straight year-on-year fall in quarterly operating profit. Analysts had already cut their forecasts of Samsung’s growth for this year based on signs of disappointing Galaxy S6 sales. Samsung is scheduled to disclose detailed results late this month.

iPhone competition

Profits rose 15 percent from the first quarter, bolstered by sales of the S6, which launched in April, but analysts said sales appeared similar to those of the S5 in the second quarter of 2014.

Samsung’s biggest rival is the popular iPhone 6, which led Apple’s sales of 61 million handsets in the first quarter of 2015. Apple is expected to launch a new smartphone in the autumn, renewing the competitive pressure, but the upcoming device is also expected to provide a boost to Samsung’s semiconductor division, which has been contracted to produce processors for it.

The South Korean company may be planning a successor to the S6 Edge called the Galaxy S6 Edge Plus, with a larger screen and more powerful hardware, according to images leaked online.

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