Samsung Electronics Co Ltd reported its second straight quarterly profit decline Tuesday. The maturity of high ? end smartphones and weakness in flat ? screen display panels weighed on the South Korean tech giant?s profitability. However, the company expects the football World Cup in Brazil to help boost sales of smartphones and screens for the quarter. There is a big chance that football fans will invest in fancy gadgets to enjoy the show.
The world?s largest smartphone company will also use its flagship Galaxy S5, launched this month, to widen profit margins and outsell its predecessor. For the months January to March, Samsung reported its operating profit fell 3.3 percent from the earlier year to $8.2 billion. Its mobile division was down 1.2 percent in profit.
Company Sees Profit Rally on Upcoming World Cup
“Samsung is expected to see profits rally in the second quarter and beyond, on the back of improved sales of display panels and home appliances,” the South Korean tech giant said in a statement. “Orders for display panels that are used for premium smartphones and TVs are expected to increase, as new mobile devices are rolled out into the market and as consumers look forward to the upcoming World Cup in Brazil.”
However, analysts see the tech giant heading for its first annual profit fall in a span of three years as margins begin to tighten across the product line. The battle is now shifting to the cheaper phones in emerging markets. They also say that Samsung?s mobile business is off for an uncertain 2014 as its low ? end phones compete with the improving quality of phones from China. Its large ? screen edge on its top ? range phones are at risk with Apple?s new models.
Further decline in the company?s profitability could put pressure on shareholders to increase payouts or create a new growth engine. Samsung?s flat ? screen display panels suffered more than 70 million from January to March. The tech giant cited the increased costs from the increased production in China, that caused the profit slump in the flat ? screen panels business.
In the chip business, Samsung?s profit went up to 82 percent from a year earlier, driven by a tight supply and solid demand from PC makers.