ChannelLife NZ - Will new Samsung products boost declining profits?

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Will new Samsung products boost declining profits?

Samsung sells more smartphones than any other company, but profits have dropped significantly in recent years. In fact, Samsung has recently posted its biggest drop in quarterly profit since 2009 - the company experienced a 60 percent drop in operating profits in the three months ended September.

Despite making more sales, profits are down due to the fact that the average selling price is lower and not enough is spent on marketing, says Bloomberg, the financial software, data and media company.

Apple started selling larger screen iPhones, and as this was an area Samsung previously dominated, this was when profits began to decline, Bloomberg says.

When the profit report was released, Samsung released a statement commenting on developments and imminent releases. "We'll differentiate our smartphone models and enhance line-up of low-cost models. We'll keep moving to secure the company's competitiveness by expanding our transaction of OLED panel and other components," it said. “The company is preparing new smartphone line-ups featuring new materials and innovative designs.”

Recently, the Samsung Note 4 was released, but it is still uncertain whether this will boost sales. “The Note 4 will help to stabilise Samsung’s device unit in the fourth quarter, but it will need more than one evolutionary model to stop the iPhone juggernaut,” says Neil Mawston, executive director of Strategy Analytics in London.

However, it could be just what the company needs. “Samsung is better positioned than any other players out there to bring out new phones with upgraded hardware features,” says Claire Kim, a Seoul-based analyst at Daishin Securities.

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