Sometimes, when it rains it pours. Samsung is experiencing that old adage right now. Not only was one of their Brazilian factories robbed, but their profits are still slipping.
That comes straight from Sammy's latest financial report. Apparently, "weak demand" for their lower end products has created a glut of excess inventory for the company. Because of this, they have needed to spend even more than usual on their already gargantuan marketing budget.
Interestingly, their guidance suggests that much of their financial trouble is caused more by fluctuations in currency than anything else. Still, there are several factors plaguing the company right now, and it's never a good thing to hear "weak demand." Here's a quote with more details,
Their record-breaking profit pace wasn't sustainable forever. Could this also be a small sign of the natural market contraction created when a product becomes so ubiquitous it creates saturation?The Korean won, which has been virtually unstoppable in its rise against the greenback (and most other currency) this year
Over-delivery of smartphones led to a glut of devices in China and Europe, where increased competition on the low end edged out Samsung’s offerings
In China in particular, Samsung’s 3G products come at an awkward time, as Chinese consumers save up for the rollout of 4G long-term evolution devices
People don’t buy tablets as often as they do smartphones, and the very success of Samsung’s phablets eats into tablet sales
Samsung spent even more than usual on marketing in the second quarter
Source: WSJ Digits