Samsung Electronics gave a reminder of the smartphone market's volatility early Tuesday by announcing that it expects to report second-quarter sales of about 52 trillion Korean won (US$51.4 billion) and an operating profit of about 7.2 billion won ($7.1 billion), down 9.5% and 24.5% respectively from a year earlier.
The company cited increased competition in China, slower smartphone market growth, a build-up of device inventory in Europe, and a strong Korean Won as the factors affecting its anticipated second-quarter numbers. It also noted, though, that it expects a more positive third quarter.
That may be optimistic: As this Reuters report shows, Samsung Electronics Co. Ltd. (Korea: SEC) is likely to come under even greater pressure in the coming months from aggressive smartphone rivals and the anticipated launch of Apple Inc. (Nasdaq: AAPL)'s next device (the successor to the iPhone 5).
However, Samsung's share price edged up on the Korean exchange to 1.295 million won as investors kept faith that the company would improve its margins.
Samsung may be the global smartphone market leader, but it is set to come under sustained pressure in the mass-market smartphone sector from the likes of Huawei Technologies Co. Ltd. , Lenovo Group Ltd. (Hong Kong: 992), Xiaomi and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), among others -- maybe even Microsoft Corp. (Nasdaq: MSFT). (See China Smartphone Star Eyes US Market , Huawei Handset Man Jumps to Lenovo, Microsoft's Elop Denies He Was a Trojan Horse , Huawei Boss Tells Handset Team to Sober Up, and Asia Strengthens Its Grip on Smartphone Market.)
It should also be noted that Samsung caused similar jitters a year ago with a similar financial report, but it's unlikely to become the next BlackBerry any time soon. (See Samsung Guidance Causes a Stir and BlackBerry Q4 Sales Sink to Sub-$1B.)
— Ray Le Maistre, , Editor-in-Chief, Light Reading