Samsung Electronics reign as No. 1 in the global mobile phone market has seen rising earnings and an expanding share market. However, that has ended.
The quarterly profits the company, based in South Korea, posted was its lowest since becoming the largest producer of mobile phones in 2012.
That drop in profits was compounded by the increase in sales by Chinese companies Lenovo Group and Xiaomi versus the Galaxy S line of Samsung.
The ascent of Samsung was through its ability to meet high-end customers’ needs and well as those of budget buyers along with the ones looking to purchase a tablet computer and smartphone hybrid.
At present, Samsung is fighting to gain back its users that opted for less expensive devices that are packed with different features by device makers Huawei Technologies and at the high-end smartphones made by Apple, which is rumored to be getting ready to launch a new generation iPhone that has a bigger screen.
One analyst said Samsung might be vulnerable, as it has no sensational products in its pipeline that are able to stand apart from the other rival devices.
Net income dropped by 18%, to 6.17 trillion won or $6 billion during the three months that ended in June. The results missed the estimates made by analysts of 6.82 trillion won.
Shares at Samsung were down 3.7% in Seoul on Thursday, the largest drop the company has seen since January.
The decline wiped out $7.4 billion from the market capitalization of the company and erased the entire advance for the stock in 2014.
Samsung increased its spending in marketing for its less expensive smartphones as a way to fend off its competition, while currency movement slashed earnings by 500 billion won. Samsung received close to 90% of its sales outside of South Korea.
Samsung for the quarter sold 95 million mobile handsets and more than 8 million tablets. It expects an increase of 10% in shipments during the ongoing quarter.
The earnings have come with Lee Jun Hee the chairman entering his third month of being hospitalized following a heart attack.
