Samsung Galaxy phones are losing momentum as the Korean consumer electronics giant estimated 47 percent increase in April-June operating profit t0 9.5 trillion won ($8.3 billion) from a year earlier.
Though Samsung Electronics’ operating profit in April-June 2013 is likely to increase by 8 percent from the previous quarter, analysts say it fell short of their forecasts.
Samsung on Friday said sales grew 20 percent to 57 trillion won ($50 billion).
Telecom industry analysts say Galaxy S4 could miss its sales targets.
Gartner last week forecast that tablet revenue for 2013 will grow at 2.8 percent, while mobile phone revenue is projected to increase 7.4 percent this year.
Sales of the Galaxy S4 hit 10 million units in May, less than a month since its debut. Sales of the S4 hit the 10 million mark about 20 days faster than the previous model.
The South Korean company will announce net income and details of quarterly financial results on July 26.
According to Strategy Analytics, India overtook Japan to become the world’s third largest smartphone market by volume for the first time ever in Q1 2013. Samsung, Micromax and Apple are among the major brands leading the Indian smartphone market.
Samsung’s growing presence in the both developed and developing mobile markets are not supporting its growth strategies and new phone launches due to lack of innovation.
Worldwide smartphone shipments expanded 39 percent year-over-year, compared with 163 percent YoY across India, during Q1 2013, Strategy Analytics said. The Indian smartphone market is increasing quicker than China (86 percent y-o-y), Japan (24 percent), the US (19 percent) and almost all other major countries. Samsung does not share country specific market share and growth details.
Samsung’s handset business generates 70 percent of the tech giant’s total profit.
Interestingly, Samsung’s 9.5 trillion won operating profit forecast, up 47 percent from a year ago, is a record. But analysts are concerned about its reliance on mobile business for enhancing profit.
The company is expected to report higher earnings in the current and fourth quarters as sales of its latest Galaxy S4 phone pick up and new products hit the stores.
Prices of memory chips, another industry which Samsung holds the lead, are also expected to remain strong, Reuters reported.
Samsung spent more on marketing than R&D in 2012 for the first time in at least three years, and the S4 was launched in March.
The company invested heavily in distribution channels including opening brand shops in 1,400 Best Buy stores in the United States.
Competition is getting intense with Chinese manufacturers such as Huawei Technologies and ZTE making ground in the popular mid- to low-end market.
There’s still a big uncertainty about how Samsung will respond to the low-end market. Nokia this week unveiled two budget 3G phones for $68. Apple is working on low cost iPhones.
