South Korean tech giant Samsung Electronics said it expects a decline in profit for a second straight quarter.
The profit decline was in line with the estimates of analysts. They said the declining sales show the challenge for Samsung to maintain its earnings growth as smartphone prices fall.
Hyundai Securities analyst Young Park said Samsung’s earnings were being affected by declining margins for smartphones as well as a slowdown in the growth rate of the market.
Still, sales are slowly growing as developing countries tend to buy cheaper handsets.
Samsung faces strong competition from major rivals such as Apple, Lenovo, and HTC.
That has prompted manufacturers to reduce prices to attract more consumers.
“What Samsung needs to do this year for additional growth are things like cost reduction and reducing marketing costs,” said HMC Investment and Securities analyst Greg Roh.”In some sense, Samsung has no way to prevent a decline in its earnings without improving internal efficiencies.”