Judging by the sheer number of smartphones that Samsung sells every quarter someone who doesn’t keep an eye on industry news would probably think that the company’s finances are completely fine. That’s hardly ever the case. Samsung released its Q2 earnings guidance and with it a one-page long “reference material” document to try and explain to investors why it struggled this quarter. Samsung estimates that it will bring in $7.1 billion in profit this quarter which is down by 24 percent from the same time a year ago.
Its no secret that Samsung spends an insane amount on marketing every quarter but this time around it has had to dig into its wallet a little more than usual. The company says that in order to reduce inventories in sales channels it had to increase its marketing expenditure.
The company acknowledges that overall weak demand for smartphones hurt its sales as well. This coupled with increased competition in China and some European markets led to higher unsold inventories in sales channels. Many low cost Android manufacturers are particularly gearing their devices to these markets which is why Samsung may have had a tough time there.
Samsung also blames currency fluctuations since the Korean WON has been rising against the US$ its not exactly smooth sailing for this Korean exporter. Samsung paints a much more positive picture for the third quarter as its expect the new lineup, which will include Galaxy Note 4, to perform well. We shall see if this claim holds up in a few months time.