Samsung earnings continue to fall, looks to IoT for help

JC Torres - Jan 27, 2016, 9:00 pm CST
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Samsung earnings continue to fall, looks to IoT for help

Companies are starting to reveal their financial performance for the last quarter and the whole year of 2015 and, in general, things are taking a slightly negative trend, even for the likes of Apple. Unsurprisingly, Samsung‘s story isn’t any better and its profits continue to slide. This time, however, its semiconductor business, as well as the foreign exchange status of the Korean Won, which it has traditionally relied on, wasn’t enough to save it. So this time around, it is looking to a new market segment, the Smart Home and Smart Health market, for hope.

Samsung recorded 53.32 trillion KRW ($44.08 billion) in consolidated revenue and 6.14 trillion KRW ($5.07 billion) in operating profits for the last quarter of 2015. Its performance for the whole of 2015 amounted to 200.65 trillion KRW ($165.90 billion) in revenue and 26.41 trillion ($21.84 billion) in operating profits. These numbers actually represent a negative turn for the company, especially for the quarter-on-quarter comparison, which Samsung attributes to many market factors, including falling oil prices, the strong Korean Won, and seasonally weak sales of its products.

Normally, its semiconductor products, like its processors, RAM, and NAND storage, do well in the market and helps keep Samsung afloat. This time, however, it was not enough, partly thanks to lowered demand in both PC and mobile device markets. Despite that, Samsung is confident it can turn around, especially with its 14 nm manufacturing process, which Qualcomm’s Snapdragon 820 uses.

TVs, in contrast to silicon, are normally the worst performers. That said, Samsung foresees that this year will be different for the industry as a whole, with people more receptive to buying new sets, especially with the Olympics coming soon. As such, Samsung will be pushing hard its Smart UHD TV lineup this year, as well as large and curved TV sets.

Smartphones are the most problematic for Samsung, and 2016 is foreseen by many, including by this Korean manufacturer, to get worse before it gets better. Samsung’s strategy here is to just keep on going, while putting more emphasis on software and its service ecosystem. Uncharacteristically, Samsung’s tablets were noted to have actually done well last quarter, thanks to seasonal demand and steady sales of its Tab A and Tab S lines.

With most of its core businesses not doing so well, Samsung is turning its gaze towards newer, less saturated markets, in particular the Internet of Things, like its SmartThing Hub or smart health products, including smartwatches and other wearables.

SOURCE: Korea Newswire


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