ibusinesslines.com November 21, 2018

Samsung's mobile woes drag on profit growth

01 August 2018, 05:44 | Jodi Jackson

Samsung just announced the launch of its new budget smartphone, the Galaxy On8.

Samsung confirmed that it aims at better numbers moving forward especially with the upcoming Galaxy Note 9.

Apple is expected to report a rise in revenue and profit for the third quarter on Tuesday, helped by resilient sales of its iPhones in a period of slower growth for the global smartphone market.

Sales fell 4 per cent to 58.48 trillion won ($52.3 billion) while operating income advanced 6 per cent to 14.87 trillion won ($13.3 billion), in line with its earnings preview earlier this month.

The company said it would bolster its flagship lineup by marketing the new phone "at a reasonable price" and packing its middle-and-low end products with updated features to fend off competition. "With Galaxy On8, we have emphasized more on the camera, which is one of the most used features by millennials today", said Sandeep Singh Arora Vice President Online Business of Samsung India.

The company's tax bill also rose to about 28 percent of pretax net income, five percentage points higher than a year earlier.

Operating income from the chip unit amounted to 11.6 trillion won, accounting for the lion's share of profit. Like other Galaxy smartphones, the Galaxy J6 comes with the latest version of the Samsung Experience UI running on top.

"The outlook for the memory chip business remains strong across all applications thanks to demand for server and PC memory as well as new mobile product launches", it said in a statement.

According to Korean site ETNews, Samsung will develop the foldable displays by March, manufacture panels in September and start manufacturing the phone itself in November. During the second quarter, its semiconductor business generated 11.61 trillion won ($10.39 billion) in operating profit, almost 80 per cent of the entire operating income.

It remains to be seen whether Samsung's difficulties in the mobile business, which accounts for about 40 percent of its revenue, are the result of its own failings or reflect the industry slowdown more broadly.

The chip unit posted a record 11.6 trillion won operating profit in the second quarter, up 45 percent from a year ago and almost 80 percent of its total operating income.

Samsung shares were down 0.5 percent in early trading, compared with 0.2 percent drop in the broader market (.KS11).

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