Lower-than-expected sales of Samsung's Galaxy S5 and its mid-range smartphones are causing the company a world of trouble, tech blogs are reporting, after its Chief Financial Office confirmed that the company's second quarter results would be down.
Announcing that "It doesn’t look too good", Lee Sang-hoon was then greeted with more bad news as the company's shares dropped 1.9 per cent, topping off an already difficult month for Samsung which has seen its shares drop by 8.5 per cent. Samsung is also expecting a 16 per cent profit drop in year on year results.
While Samsung won't reveal the cause for the warning until their results are announced, analysts have suggested that weaker-than-expected sales of the Galaxy S5 and its mid to low-range handsets are to blame.
Speaking to the Inquirer KTB Investment & Securities spokesperson Hin Sung Hae explains the possible reasons.
"Strengthening competitiveness of local players in emerging markets are hurting sales of Samsung's lower-end smartphones, the main reason behind the lowered earnings estimate largely stemmed from weak smartphone sales."
Despite shifting over 11 million handsets to stores, it's possible that millions fewer have actually been sold to consumers. In addition the Galaxy S5 is an expensive product both to build and sell, and it's believed that Samsung was betting big on the phone being a huge global success.
Boasting new technologies like a fingerprint scanner and a heart rate monitor on the back, the S5 is the company's most advanced handset costing in excess of £500 off contract.
It doesn't help that recent surveys in the US have shown that nearly half of those asked have said they'll be buying a new iPhone in the next three months.