People aren’t that into the Galaxy S9, Samsung’s earnings show

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Samsung's mobile woes drag on profit growth

Samsung Electronics posted 14.9 trillion won ($13.3 billion) in operating profit for the second quarter that ended on June 30 as revenue fell 4 per cent to 58.5 trillion won ($52.2 billion) from a year earlier, the company announced on Tuesday. Its phone business reported 2.67 trillion won in operating income during the three-month period, compared with 4.06 trillion won a year earlier.

"Samsung was already lost to China in price competition and is getting threatened by Chinese models in designs and hardware strength", said Park Jung-hoon, a fund manager at HDC Asset Management that owns Samsung shares. Earnings from the TV business will continue to improve as Samsung expands sales of new innovative premium models including QLED and 8K TVs.

Higher marketing expenses and the disappointing performance of the flagship S9 smartphone, which fell short of its sales target, weighed on its mobile performance, Samsung said. Bringing on-screen fingerprint scanning and a triple-lens camera to the budget segment will ensure Samsung is managing to sell volumes, which could eventually counter poorer flagship sales, if they ever happen. Its screen manufacturing unit said last week its unbreakable, bendable screen had passed USA safety testing, a key step towards bringing foldable phones to market.

Samsung said the system LSI and foundry businesses would benefit from higher demand for mobile Aps and image sensors, noting that flexible OLED shipments would rise despite the intensifying competition.

USA buyers who want the LTE version can get theirs from Verizon starting on August 10, as well, although it's not clear what the privilege of cellular connectivity will add to the base price of the Tab S4.

Revenue shed 4.1 percent over the year to 58.48 trillion won (52.27 billion USA dollars) in the June quarter, and net income inched down 0.1 percent to 11 trillion won (9.8 billion US dollars).

The operating profit for the chip division accounted for 78.1 percent of the entire pie, trailed by the IT and Mobile Communications division at 17.9 percent.

Slower sales don't necessarily mean slow sales, though.

Consolidated operating profit stood at 14.87 trillion won (13.3 billion USA dollars) in the April-June quarter, up 5.7 percent from the same period of a year ago.

Samsung's mobile business accounts for almost 40 percent of the company's sales. As it was reported earlier, the Galaxy On8 comes with the Snapdragon 450 chipset and is the third smartphone from Samsung to sport the said SoC. Samsung has also added other features such as Super AMOLED Infinity display with 18.5:9 aspect ratio, Android 8.0 Oreo and a beefy 3500mAh battery.

Net income for Samsung came in at $9.8 billion, up 2 percent from the same quarter past year. Samsung previously posted seven successive quarters of profit growth, fueled by high demand and prices within its lucrative memory chip business.

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