Samsung sees 74 percent drop in mobile business profits

Samsung had warned that its third quarter results wouldn’t bring good news for those keeping an eye on its mobile business and that’s exactly what has happened. The company has posted a 74 percent year-over-year drop in profits for its mobile business whereas the company-wide operating profit drop was posted at 60 percent and its lowest since the second quarter of 2011.

For this quarter Samsung also posted a 20 percent drop in revenue. Samsung had already issued a warning regarding its third quarter operating profit and had predicted that sales would drop by as much as 22 percent whereas the operating profit would be down 62 percent year-over-year.

In its earnings report Samsung has blamed increasing competition in the market and higher marketing costs. Saturation at the high-end is also hurting the company. The average selling price wasn’t as high as Samsung would have expected since customers purchased a higher percent of mid-range smartphones.

For 2015 Samsung will be focusing on enhancing the product competitiveness in its mobile business for each price tier and will solidify longer term business fundamentals to secure sustained growth and profitability.


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