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Samsung reports fifth straight quarterly profit drop as Galaxy S6 sales fall short

Associated Press
Published | Updated

SEOUL, South Korea – Samsung Electronics reported Thursday a fifth straight quarterly profit drop as the Galaxy S6 series of smartphones failed to reverse its declining fortune in the smartphone industry.

Samsung's April-June net income was 5.8 trillion won ($5 billion), down 8 percent from 6.3 trillion won a year earlier. A FactSet survey of analysts predicted 5.6 trillion won of net income.

Sales fell 7 percent over a year earlier to 48.5 trillion won while operating income dropped 4 percent to 6.9 trillion won, in line with its earnings preview earlier this month.

A robust performance at its semiconductor department helped narrow the profit decline. Operating income from its semiconductor division surpassed the 3 trillion won mark for the first time in multiple years.

But the launch of the latest flagship smartphones, the Galaxy S6 and S6 Edge smartphones, were not enough to halt its decline in the smartphone industry.

Samsung said the improvement to its phone profit was marginal due to low-volume shipments and high marketing expenses. It generated 2.8 trillion won operating income from the mobile business, highest in the last four quarters, but a big decline from 4.4 trillion won income a year earlier.

When the S6 and S6 Edge phones were introduced in the market in April, the phones were dubbed by local media as the first products to be overseen by the Samsung chairman's son, Lee Jae-yong, a vice chairman at Samsung who is widely expected to succeed his ailing father.

But sales of the flagship models fell short, dealing a blow to the 47-year-old apparent successor who has not proven that he can revive Samsung's fortunes. The company was hit by two problems with its Galaxy S6 series. The regular version of the phone, the Galaxy S6, wasn't as popular as expected, while it could not keep up with demand for the S6 Edge model, which features a display that curves on both sides that is more difficult to produce.

Market research firm IDC said Samsung, still the world's largest maker of smartphones, was the only top five smartphone vendor that lost its market share during the second quarter, falling to 22 percent, from 25 percent a year earlier.