In its Q2 earnings guidance, Samsung has shared that its quarterly profits may not be as robust as Q2 2014, with the South Korean manufacturer predicting a decrease of 4 percent from the same period a year ago. Samsung is predicting an operating profit of KRW 6.9 trillion ($6.1 billion) with an overall revenue of KRW 48 trillion ($42.5 billion), down 8.4 percent when compared to Q2 2014.
Samsung was counting on its latest flagships — the Galaxy S6 and the curved Galaxy S6 edge — to boost profits, but it looks like the vendor underestimated demand for the edge variant, according to The Wall Street Journal:
The company initially expected to sell four Galaxy S6 smartphones for each Galaxy S6 Edge that it sold, and set up its production facilities accordingly. Instead, demand was much likely closer to even for the two devices, the person said.
That led to a glut of unsold Galaxy S6 devices—particularly white-colored devices—and not enough Galaxy S6 Edge smartphones, the person said.
The company has reconfigured its manufacturing operations, which are concentrated in Vietnam, to be able to produce as many Galaxy S6 Edge devices as the market demands, according to the person, who says that sales and profit figures could pick up again in the third and fourth quarter of the year.
Samsung's Q2 guidance is better than what the vendor managed in Q1 2015 with an operating profit of KRW 5.98 trillion ($5.63 billion) on revenues of KRW 47.12 trillion ($44 billion). It remains to be seen whether increased production of the Galaxy S6 edge will have a positive impact on Samsung's third and fourth quarter earnings. The manufacturer will release its Q2 earnings sometime later this month.