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Samsung's Galaxy appeal shrinking?


Samsung's Galaxy appeal shrinking?


Samsung is forecasting quarterly earnings that are below the already modest expectations for the electronics giant.

That has increased concerns that the South Korean firm’s smartphone business may have peaked.

It said it is looking at an operating profit of 6.45 billion euros – up 47 percent from a year ago – which would be a new record.

However, growth in sales of its Galaxy phones is sliding and new rivals are emerging to eat away at its market share.

Last year Samsung spent more on marketing than on research and development, for the first time in at least three years.

HMC Investment Securities analyst Nho Geun-Chang believes that was a factor: “I think Samsung spent more on marketing expenses than expected because of the launch of Galaxy S4 smartphone, which led the company’s results to miss the market consensus.”

Wow factor?

Samsung’s shares have dropped 17 percent since early June with
investors fearful it may go the same way as Apple and other once-mighty players that are struggling with shrinking profit margins in a business where innovation is key.

“Is Samsung’s smartphone story now over? Not quite yet. It’s growth is indeed slowing due largely to disappointing sales of the S4,” said Jung Sang-jin, a fund manager at Dongbu Asset Management, which owns Samsung shares.

“Yet I think Samsung has some exciting stuff up its sleeves. The problem is no one is sure whether these products can really wow investors and consumers.”

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