SEOUL, South Korea—Samsung Electronics Co. Ltd., the world’s third-largest mobile handset vendor, said revenue from mobile-phone sales fell 4.5 percent to $4.2 billion from the year-ago quarter on shipments of 26.3 million units, missing analysts’ reduced expectations for the company.
The company blamed erosion in average selling prices (ASPs) and said that, contrary to financial and market analysts’ view, market conditions for handsets had stabilized in the second quarter and that it would regain its footing in the second half of the year. Should sales of its “Ultra” line of handsets gain traction, the company said, it expects ASPs and sales volumes to significantly improve.
Analysts attributed the decline in Samsung’s ASP, which dropped to $167 from $171 in the previous quarter, to low-cost handsets sold by Nokia Corp. and Motorola Inc., the top two handset vendors globally. Analysts expect Nokia and Motorola to report solid quarterly results when they report next week, possibly resulting in increased market share, which may erode Samsung’s market share.
Analysts also made dismal forecasts for LG Electronics Co. Ltd.’s financial picture, suggesting that its profits may drop by 50 percent over the year-ago quarter when the company reports its earnings next week. LG is the world’s fourth-largest handset maker behind Nokia, Motorola and Samsung. Its portfolio is heavy in low-cost handsets where Nokia and Motorola can out-compete it by virtue of their size and economies of scale.
Operating profit in Samsung’s telecommunication network division, the bulk of which comprises mobile handsets, fell 24 percent from the year-ago quarter to $429 million.
The company’s overall net profit was hurt by the lag in mobile-phones sales. Samsung is the world’s second-largest chip vendor behind Texas Instruments Inc., as well as the world’s leading maker of television liquid-crystal displays (LCD) and other home appliances.
