Samsung might lower S6 prices after another drop in profits for Q2 2015

Samsung today released their earnings for Q2 2015 and they were pretty much in line with the expectations of both the company and financial analysts.

The South Korean conglomerate recorded KRW 5.75 trillion (USD 4.93 billion) for its net profit, from KRW 6.9 trillion (USD 5.9 billion) in operating profits and KRW 48.54 trillion (USD 41.7 billion) in revenues. This represents an approximately 9% drop in net profits compared to the same period last year. While the company's operating profit rose by about USD 0.77 billion compared to Q1, it was still a drop of 4% compared to this time last year.

The IT & Mobile division of the company continues to perform poorly, with operating profits from that division falling 37.5% year-on-year. The company believes that its phone division will continue to face a "difficult business environment" as even the introduction of the Galaxy S6 did not have a significant impact on the company's bottom line. Samsung is pinning its hopes on the launch of the Galaxy Note 5 and (possibly) S6 Edge+ next month to turn things around, while momentum for its current flagships, the S6 and S6 Edge, will be maintained by "adjusting the price", signifying a possible discount.

One bright spot for the company, though, was its Device Solutions division, incorporating both its semiconductor and display panel businesses. This saw an increase in sales of KRW 1.64 trillion (USD 1.4 billion) as operating profits rose by as much as 85% year on year.This was likely helped by the company's decision to use its own chips instead of Qualcomm's as well as the new found friendship between the South Korean company and Apple.

Meanwhile, the company's smartphone business is under increasing pressure, as it is being sandwiched between the increasing success of Apple in the high-end and the constant flow of Chinese manufacturers, like OnePlus and Xiaomi, undercutting the company's prices by as much as half, while offering mostly similar specs on the low end. If this trend continues, Samsung may have to rethink its position as a company, given that the smartphone division, which has traditionally raked in the biggest amounts of cash for the company, was outshone by the Device Solutions division in operating profits for the fourth consecutive time this quarter.

Samsung logo image via Shutterstock

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