SEOUL: The South Korean company, Samsung Electronics Co, has suffered loss as its profits fell 39 per cent in first quarter apparently due to bigger iPhones in market.
The company reported Wednesday that its January-March net profit was 4.63 trillion won ($4.35 billion), compared with 7.49 trillion won a year earlier. That was lower than the forecast of 4.97 trillion won in a survey of analysts by financial data provider FactSet.
The bigger-than-expected drop was due to a big profit plunge in Samsung’s mobile business. The maker of Galaxy smartphones said its mobile division generated 2.74 trillion won in quarterly profit compared with 6.43 trillion won a year earlier.
Analysts estimate Samsung sold more smartphones than Apple during the quarter. But the Korean firm lost ground in the high-end market to Apple after the maker of the iPhone began offering models with bigger screens last fall.
Apple on Tuesday reported that it sold 61 million iPhones in the first three months of the year, which drove another quarter of blow-out profits.
Samsung, which does not disclose its smartphone shipments, is estimated to have sold 81 million smartphones during the quarter according to analysts. But most of the sales increase came from mid-level handsets like the Galaxy A series, which are sold at a cheaper price than its flagship models. The period preceded the launch of the latest versions of Samsung’s flagship smartphones.
Samsung said is quarterly revenue fell 12 percent from a year earlier to 47.12 trillion won while operating income dropped 30 percent to 5.98 trillion won, in line with Samsung’s earnings preview earlier this month.
The Korean company said its profits will increase during the second quarter as the Galaxy S6 and S6 Edge with curved screens expand sales after their global launch this month. But the shipments of those high-end phones will not be big enough to offset an expected decrease in sales of middle- to low-end models, it said. Marketing expenses will also go up, pressuring its profit margin.
The initial sales of the S6 were “great” but the pre-orders of Samsung’s new smartphones were “no match to the iPhone 6,” said Tom Kang, director at Counterpoint Technology Market Research.