Samsung Forecasts Third Quarter Profit Plunge, Cites "Intense Competition" In Smartphone Space
That's the lowest it will have been in more than three years, and it's largely due to Chinese manufacturers producing cheaper smartphones that ultimately cut into the company's bottom line, along with expensive ads.
"Smartphone shipments increased marginally amid intense competition. However, the operating margin declined due to marketing expenses related to aggressive promotions and lowered ASP (Average Selling Price) driven by reduced proportional shipments of high-end models coupled with price decreases for older smartphone models," Samsung stated in its filing.
All those ads poking fun at Apple come at a cost, though it's not just the smartphone category that is suffering. Samsung also noted a drop in its logic chip business and OLED panel shipments due to weaker than expected demand in the mobile product category.
Samsung recently launched its Galaxy S5 smartphone and Galaxy Note 4 phablet, a pair of products that will compete against Apple's iPhone 6 and iPhone 6 Plus devices for dominance in the high-end handset market. However, Samsung's future outlook may depend on the company's ability to build less expensive devices to fend off the competition that's been biting at the company's heels.