Samsung warned customers and investors alike in the first half of the year, that the second half would remain a significant challenge, and the results seem to indicate exactly that.
Samsung is bracing its customers as well as investors of a rocky end to 2014. The company argued that point earlier in the year – but many failed to hear the loudness of the statement. Samsung said that the second half of 2014 would “remain a challenge” but urged consumers, and investors alike that they had a plan in place to hold themselves up.
That is, until the actual gravity of the situation reached the consumer base. Samsung is estimating just hours before the release of their Q3 results that their operating profit is going to plunge, some 60% to lows and 20% drop in sales that the company hasn’t seen in years.
It all reflects back to Samsung’s growing problem in China. The company is failing to compete in a market that is required by tech companies to win, and win big. China is the largest smartphone market on the planet, and even Apple has acknowledged that no matter how well they do in the United States, or other parts of the world – the 15-20% that China makes up is by far the most important.
However, there is some overwhelming information that is worthwhile to those interested in Samsung, or interested in the company’s performance against its competitors. As the iPhone gets bigger, the sales of Android devices like Samsung’s Galaxy line – will continue to get smaller. The Apple iPhone owns the smartphone market for the most part and right now, this will be a major moment for Samsung as they unveil their results for the third quarter of this, all-important year.
Many analysts have argued that the single-most important thing Samsung has to focus on in this moment, and in this technological climate is protecting their ever-falling, and quickly falling sales numbers, and market share. With relatively tame launches, and openings, Samsung doesn’t have the cushion that Apple has with iPhone, when it comes to running their business.
Anytime a company in Samsung’s position is willing to warn investors ahead of time, that a significant drop in revenue or profit, and they’re willing to let them also know that they aren’t sure where, or when the turnaround is happening – that should serve as a major red flag.
Companies like Apple, who have been setting records in the profit and sales categories will often see dips like this from time to time, and it’s never something investors worry about too much. However, it is something significantly different and something that Samsung is going to have to start addressing moving forward.