Samsung Electronics Co Ltd has forecasted poor results for its third quarter with analysts cutting down the company’s year on year operating profits by around 60%. Increasing competition from Apple Inc. (NASDAQ:AAPL) and other Chinese smartphone makers has plagued the company’s sales. With weak mobile earnings expected to hurt its Q3 figures, investment researcher and Senior Analyst of Susquehanna Financial Group, Mehdi Hosseini talked about what it would take to produce a turnaround for Samsung’s struggling handset business on CNBC’s ‘Digital Domain.’
Hosseini summed up the reasons for Samsung Electronics Co Ltd’s Q3 woes in these few words. “I think the problem is competition out of China in the mid to low end range and also Apple Inc. (NASDAQ:AAPL) that just introduced iPhone 6 that is also eating into Samsung’s high end Galaxy S5,” he said.
Samsung’s plummeting sales could be redeemed only by producing radical innovations in its soon to be launched Galaxy S6. He was of the opinion that it was not the internal working but rather the look, feel and form factor of a smart phone that will make a difference. So, it could be deduced that the Galaxy S6’s flexible screen could give Samsung its much needed redemption.
Hosseini mentioned that building its own chips for its smartphones will give Samsung Electronics Co Ltd (KRX:005935) an edge over competitors such as Apple Inc. (NASDAQ:AAPL).
“This is something that Apple does not have, Apple relies on others for manufacturing, so this is something that is going to make a big difference [for Samsung] looking forward,” he said.
To its credit, the South Korean company pioneered organic light-emitting diode (OLED) display technology and is the only handset original equipment manufacturer (OEM) that is vertically integrated. Producing their own chips would help them in improving the time taken for their devices to enter the market.
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