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Samsung's profits are down, but it believes the S6 will change that

Samsung's profits are down, but it believes the S6 will change that
Mariella Moon
Mariella Moon|@mariella_moon|April 29, 2015 2:02 AM

Samsung's latest earnings numbers reveal that the company did better in the first quarter of 2015 than at the end of 2014, but its overall profits are still down while the competition's are rising. The company earned an operating profit* of 6 trillion won ($5.6 billion) for January to March 2015, eclipsing the 5.3 trillion ($5 billion) won it earned last quarter. However, that's not enough to match its performance from the same period last year, when it boasted an $8 billion operating profit. Samsung's mobile division, for one, has shifted dramatically this past year. The company recaptured the top spot from Apple in the list of manufacturers with the biggest smartphone shipments for the first quarter, according to Strategy Analytics. Unfortunately, tablet and feature phone sales decreased, resulting in an overall loss in revenue.

In fact, the division's operating profit slid down from a healthy 6.43 trillion won ($6 billion) for Q1 2014 to only 2.74 trillion won ($2.6 billion) for Q1 2015. Samsung clearly needs a compelling product to compete with Cupertino's iPhone sales, and the South Korean corporation believes the new Galaxy S6 and S6 Edge are the answer. The company expects an increase in global earnings by selling 23 million S6 and 23 million S6 Edge units this year. It seems to be struggling to keep up with the demand for the wraparound screen version of its new flagship, but it did promise to "resolve the difficulty in supply."

Outside the mobile division, Samsung's semiconductor business continues to flourish, with an operating profit of 2.93 trillion won ($2.7 billion), up from last year's 1.95 trillion won ($1.8 billion). The Display Panel division's also doing well thanks to an increasing demand for UHD TVs, earning a 520 billion won ($490 million) profit that's much larger than last year's 80 billion ($75 million).

*Operating profit = revenues - cost of sales - operating expenses

Samsung's profits are down, but it believes the S6 will change that