Friday, October 10, 2014

Samsung seeks to cut costs after weak projections for the third quarter

NEW YORK-Samsung will seek to cut costs and perhaps change executives until the end of the year to try to compensate for the fall in profits. The world's largest manufacturer of smartphones said on Tuesday that its operating profit for the third quarter will have a fall of up to 62% over the same period last year, impacted by lower sales of smartphones. The result will be the fourth consecutive decline and the most significant for the company in the last five years.
Bigger Korean company in terms of market value, the Samsung has faced stiff competition from Chinese manufacturers that are launching cheap phones and also from Apple, which has had success in iPhone sales 6.
The perspective given by the company makes clearer its great dependence on the profits generated by the mobile devices division. "The chip Division is, at the moment, the only one presented a good performance," said C.W. Chung, an analyst at stockbroker Nomura in Seoul. "Until the device Division recovers, a good performance in this segment will be essential".
Critics say that Samsung is facing difficulties in its growth plan and definer of smartphones, software and devices to wear. The company gave signs that would be turning to the world of semiconductors to announced on Monday an aggressive investment of $ 14.7 billion to build a chip factory in South Korea.
Uncertainties about the future of the company are also related to the transition of power to a new generation. The Chairman, Lee Kun-hee, still recovering from heart problems that led him to be hospitalized in May. For some experts, the Executive does not have the vision and leadership necessary to make the Samsung to grow in new areas.
More recently, the only son of Lee, Jay y. Lee, has moved to take command of the company. "The transition needs to be quiet, but we'll have to wait and see if the child is able to fulfill a similar role to that of the father," said Chung, of Nomura.
The company's mobile devices unit, which generates more than 60 percent of its operating profit, took the measure of cutting 25% of the bonus 1st semester of their highest ranking managers, according to people with knowledge of the matter. Now, executives are searching for more cost cuts. Last month, the company relocated 500 software engineers to other units.
According to Samsung, the operating profit will fall between 58% and 62% for something between 3.9 trillion (US $ 3.6 billion) and 4.3 trillion won ($ 4 billion). Analysts estimated 4.3 trillion won. Last year, the company had an operating profit of 10.2 trillion won. For the third quarter, it is expected a prescription between 46 and 48 trillion trillion won, less than the 59.1 trillion last year. The company also gave cautious prospects for the fourth quarter, saying that the prospects are uncertain, and will disclose the results for the period at the end of the month.
(Dow Jones Newwires)
Valor Econômico - 07/10/2014
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