Samsung has released its earnings estimates for Q2, and is predicting a drop in profits. The South Korea-based electronics company says its earnings will probably be around $6.1 billion, representing a four percent decline against the second quarter of 2014.
It’s doing brisk business in its semiconductor division, so the slide is mostly attributable to lackluster sales for its latest flagship smartphones, the Galaxy S6 and the S6 Edge. Complicating matters somewhat is the fact that Samsung smartphones have actually been doing pretty well this year, outselling their rival iPhones in terms of units shipped. But Samsung apparently misjudged demand for each of the devices, ultimately having to manage a glut of Galaxy S6 smartphones and a shortage of S6 Edge devices; company executives recently told analysts that they expected to catch up with demand for the latter devices in June.
The other issue is that it’s an increasingly crowded and competitive market. Smaller smartphone makers such as Huawei and Meizu are putting out cheaper devices that maintain comparable technological standards like fingerprint scanning capabilities, while arch-rival Apple is meeting Samsung on the large-screen front with its latest iPhone 6 Plus device, which has sold like gangbusters. That may be some consolation; earnings may be done, but it is perhaps an achievement in itself that Samsung can still enjoy an overall operating profit in an increasingly challenging market landscape.