Samsung's Earnings Drop Due to Low Smartphone Demand

samsung ultra hd blu-ray ces 2016 — Rich Shibley/Digital Trends

No one is safe from the smartphone slowdown, it seems. Samsung Electronics reported a 40-percent decrease in net profit in the fourth quarter of 2015 in comparison with last year’s numbers, citing declining smartphone and mobile component sales. The company’s overall net profit for the fourth quarter was 3.2 trillion won ($2.7 billion).

Although earnings and demand for smartphones decreased, the mobile division’s profit rose to 2.23 trillion won (roughly $1.8 billion) from 1.96 trillion won ($1.6 billion) for the equivalent period last year. Samsung said that it shipped 97 million phones in the fourth quarter. The number of Galaxy Note 5 phones sold increased, as did the number of mid-to-low-range smartphones in Samsung’s A and J lines. Tellingly, Samsung declined to offer sales numbers for the Galaxy S6 and S6 Edge. Tablet shipments, though, also got a boost quarter over quarter, rising to 9 million shipped in Q4.

Samsung projected that first-quarter mobile profits would increase from the October to December period, thanks to the launch of new smartphones. The phones in question are likely to be the Galaxy S7 and S7 Edge, both of which are expected to arrive at Mobile World Congress in late February or early March. Even though overall smartphone sales are expected to decline in 2016, Samsung still anticipates slight growth in mobile.

“As for the outlook for 2016, Samsung expects single-digit percentage growth in both the smartphone and tablet categories amid softening demand and intensifying competition,” Samsung said in a statement. “Despite this challenging environment, the company will focus on increasing smartphone shipments and maintaining a double-digit margin through releases of competitive devices and an optimized product portfolio.”

Samsung will rely on tablets and wearables like the Gear S2 to help boost its mobile numbers this year. However, Samsung does expect 2016 to be difficult: Weakening demand for smartphones hurts Samsung’s processor sales, phone sales, and overall profit.

The company’s overall sales for the fourth quarter increased 1 percent to 53.3 trillion won ($44.4 billion) and operating income rose 16 percent to 6.1 trillion won ($5.1 billion).

Samsung’s semiconductor and display business had a tough fourth quarter, due to weak PC demand and a decrease of display sales, respectively. However, both the TV and home appliance businesses saw increased sales. High-end 4K TVs helped boost those numbers.

Samsung’s earnings backslide, as demand for smartphones wanes

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