Samsung's Recent Financials Reveals Reduced Profits Due to 'weak demand' on Lower-End Products

[dgstorm]

Sometimes, when it rains it pours. Samsung is experiencing that old adage right now. Not only was one of their Brazilian factories robbed, but their profits are still slipping.

That comes straight from Sammy's latest financial report. Apparently, "weak demand" for their lower end products has created a glut of excess inventory for the company. Because of this, they have needed to spend even more than usual on their already gargantuan marketing budget.

Interestingly, their guidance suggests that much of their financial trouble is caused more by fluctuations in currency than anything else. Still, there are several factors plaguing the company right now, and it's never a good thing to hear "weak demand." Here's a quote with more details,

• The Korean won, which has been virtually unstoppable in its rise against the greenback (and most other currency) this year
• Over-delivery of smartphones led to a glut of devices in China and Europe, where increased competition on the low end edged out Samsung’s offerings
• In China in particular, Samsung’s 3G products come at an awkward time, as Chinese consumers save up for the rollout of 4G long-term evolution devices
• People don’t buy tablets as often as they do smartphones, and the very success of Samsung’s phablets eats into tablet sales
• Samsung spent even more than usual on marketing in the second quarter

Their record-breaking profit pace wasn't sustainable forever. Could this also be a small sign of the natural market contraction created when a product becomes so ubiquitous it creates saturation?

Source: WSJ Digits

 

[mountainbikermark]

Well since they've copied the Apple business model in so many ways, I'm not surprised at all that their results are following suit in the same way. Yes the Notes and Galaxy top tier phones are very nice and more innovative than Apple devices but one can easily see if it's a Samsung device from just inside seeing distance, the only question being which model, no matter whether a Note or a bottom of the tier phone along with Samsung adding more Samsung bloat and inability to truly customize than even Verizon or Google can manage to accomplish. Yes much of Samsung exclusive content is very useful but whether you want it or not is no longer your choice. Both Google and Samsung will battle it out for who has the most embedded products, getting totally away from the original design of Android and heading more toward the walled garden of Apple, with results following suit. Who'd have thought the day would come when Sense would be considered the most Android like user interface embedded over native?

Sent from my LG-D801 using Tapatalk

 

[dgstorm]

Intriguing perspective!