Samsung has disappointed with their quarterly earnings guidance, which has resulted in its shares going down more than 3 percent. Though the 9.5 trillion won ($8.3 billion) operating profit forecast is an increase of 47 percent from a year ago, it is less than the 10.16 trillion won profit expected by analysts.
We earlier heard that the Galaxy S4 is doing well on the market, but disappointing sales of the device is said to be the main reason behind the company’s slow growth.
While some are also pointing towards the company’s decision to spent too much on Galaxy S4 marketing. The South Korean giant reportedly invested more on marketing than R&D in the previous year, and they also spent heavily in distribution channels. As you might know, they opened shops in 1,400 Best Buy stores in the US.
So what if Samsung has a problem with its mobile business, you ask? It is a big issue since its mobile business provides the company with 70 percent of total operating profit.
Samsung is expected to come out with better earnings report for the current and fourth quarters via improved sales of the S4 and new products, and their component business is also expected to pick up. But some believe that Samsung’s chances for better earnings in the future lie in the popular mid- to low-end market, where Huawei and ZTE are big players. And also important will be wearable devices which are supposed to be the future by many, including Apple and Google.
Of course this earnings guidance is certainly not showing the end of Samsung, but the company may have to make some very important strategy changes sometime soon if they plan to remain as a big player in the tech world.
What route do you think Samsung has to focus in the future? Wearable tech? Low end phones? Leave your thoughts below.
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