Samsung signals phone price decrease

Galaxy S6 fails to reverse Samsung’s declining fortunes in the smartphone industry

Samsung Electronics on Thursday offered a downbeat outlook for the second half of the year as smartphone market growth slows and ahead of the expected release of new iPhones from arch rival Apple Inc.

The firm also reported a 4 per cent fall in second-quarter profit and ruled out a “special dividend” similar to a big year-end payout for 2014. That disappointed investors, pushing its stock lower as pressure grows on Korean firms to return more capital to shareholders.

Samsung's dominance is being chipped away at the low-to-mid end by Chinese rivals such as Huawei Technologies Co Ltd and in the premium segment by Apple, while some markets show signs of saturation. Researcher TrendForce last week cut its 2015 global smartphone market growth forecast to 8.2 per cent from 11.6 per cent earlier.

Samsung remained the top smartphone maker in April-June, but shipments fell in part due to an inability to build enough curved-screen Galaxy S6 edge handsets, analysts said. The firm said its mobile division will launch new larger-screen phones in the third quarter but may not be able to improve earnings.

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“I don’t think there’s much to expect from Samsung in the third quarter,” said fund manager Park Jung-hoon at HDC Asset Management. Second-quarter profit was 6.9 trillion won, matching the company’s estimate issued earlier this month. “While 2H 2015 is expected to present mounting challenges, the company will try to improve earnings,” Samsung said on Thursday.

Samsung’s mobile business booked a 38 per cent decline in April-June operating profit at 2.76 trillion won. It expects smartphone shipments to rise in the third quarter from the second, but said average selling prices could fall due to price adjustments for S6 models aimed at boosting sales. The firm has brought forward the launch of its latest Galaxy Note phone to August from September.

Reuters