Samsung’s earnings call for the first quarter of 2015 has not proven to be very convincing. The company reported a drop of 39-percent for its net profit as compared to the same time period in 2014. It appears that the company is still recovering from increased competition in the smartphone market, although it reports good news on the semiconductor front.
The South Korean company reported net profit of 4.63 trillion won (about RM14.46 billion) as opposed to the 7.49 trillion won (about RM25 billion) it reported a year ago in the same time frame. This fell below Samsung’s own forecast for operating profit of 5.9 trillion won (about RM19.7 billion). Revenue slipped 12 percent year-over-year to 47 trillion won (about RM157 billion).
Increased competition from companies like Xiaomi and OnePlus have been hurting Samsung’s bottom line since the end of last year, causing a 70-percent drop in net profit for the company in the fourth quarter of 2014. However, these most recent numbers do not reflect the sales from the new Samsung Galaxy S6 and S6 edge; both of which have been successful in reviving the Samsung brand.
Samsung is also optimistic about its semiconductor business, which has a very bright outlook considering that it has been tapped to produce the new A9 processors for Apple next generation iPhones due later this year. The division will also reportedly be producing chips for Qualcomm’s next generation Snapdragon 820.
It is likely that Samsung’s Q2 of 2015 will look much better than the first quarter financial results, mostly buoyed by the new flagship phones. Although, it shouldn’t be expected to reach the same heights as before and it will not be too surprising if the profits were also reduced.