This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Samsung Hurt By Apple After Disappointing Second Quarter Results

Stocks in this article: GOOG AAPL

NEW YORK (TheStreet) -- Even though Samsung said a strong Korean currency was one of the main reasons the company's second quarter earnings were disappointing, the company is being attacked by Apple (AAPL) at the high-end of the smartphone market and low-end Google (GOOG) Android devices.

Samsung announced second-quarter revenue was 52 trillion won ($51.5 billion USD), down more than 3% sequentially, and more than 10% from a year ago. Second quarter operating profits were estimated at 7.2 trillion won ($7.12 billion USD) - off more than 15% sequentially, and nearly 25% from a year ago.

The Korean electronics giant blamed a number of reasons for the poor showing, including the fact the second quarter is a "seasonally weak period" for sales in some regions and that the company is facing increased competition in the world's largest marketplace - China.

Here's What It Looks Like Inside Tesla's Massive Factory

Here's What It's Like to Work for Elon Musk

Samsung noted that it sold fewer 3G phones in China because consumers seem to be waiting for faster 4G devices. Although still the Chinese sales leader, Samsung finds itself being squeezed at both the higher and lower ends of the marketplace there. The company is facing increased competition from local Chinese brands such as privately-held Xiaomi, which started selling smartphones only three years ago.

In the first half of 2014, Xiaomi shipped almost four times the number of phones it did in the same period last year - so many phones that the company is poised to overtake Lenovo (which uses Google's Android operating system) as the second most popular phone brand in China. Xiaomi revenues rose 149%, year-over-year, reaching 33 billion yuan ($5.3 billion USD).

In Apple's fiscal second quarter, the company reported net sales in China reached $9.3 billion - a year-over-year jump of 13%. On Apple's second-quarter earnings call, CEO Timothy D. Cook noted the company was "especially proud of our very strong results in Greater China, where we established an all time quarterly revenue record of almost $10 billion including the results from our retail stores."

In an email to TheStreet, Evercore analyst Rob Cihra said "we continue to estimate Apple's CQ2 iPhone shipment growth of +12% year-over-year (35 million) having surpassed Samsung's just flat year-over-year (approximately 76 million units). Potential for zero-sum competitive cannibalization will be particularly acute in the second half of 2014 when we expect Apple to launch its larger-screen 4.7" iPhone 6 in late-September, followed by a 5.5" competitor to Samsung's Galaxy Note."

Apple shares were off 1% to $95.00 in mid-morning trading in New York.

Though Samsung is struggling in China, smartphone sales in other regions are slipping too. Despite bragging about a 40% European market share, Samsung admitted weaker cell phone and smartphone demand, which caused "increased inventory."

Worldwide tablets sales aren't faring much better, with Samsung placing the blame on a longer replacement cycle for tablets (two-to-three years) than smartphones, as well as the higher numbers of 5-to-6 inch smartphone/phablets are being purchased to replace 7-to-8 inch tablets.

All of this had a ripple effect on a number of Samsung's other manufacturing divisions, as a phone and tablet slowdown negatively impacted the company's other divisions, including touchscreens, processors and memory chips.

Samsung noted it had also begun to spent a lot more to advertise slow selling products, as the company unveiled a number of promotions to reduce existing inventories in sales channels, thereby increasing the company's marketing budget compared to the previous quarter.

Despite the negativity surrounding the second-quarter, Samsung company "cautiously expects" a more positive outlook in the third quarter, with the coming release of new smartphones including an updated Galaxy Note 4 phablet.

-- Written by Gary Krakow in New York.

To submit a news tip, send an email to

Gary Krakow is TheStreet's Senior Technology Correspondent.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs