Roundup: Samsung's Q2 profit misses estimates on weak China demand

Samsung Electronics' second-quarter operating profit missed market estimates for its flagship Galaxy S6 smartphone and lack of supply in curved-screen Galaxy S6 Edge, the company said Thursday.

Operating profit was 6.9 trillion won (5.9 billion U.S. dollars) in the three months through June, the company said in a statement. It was up 15.36 percent from the prior quarter, but down 4.03 percent from a year earlier.

It also missed market expectations of about 7.1 trillion won. Samsung shares moved in negative territory in Seoul trading, falling more than 1.6 percent in the morning session.

Revenue slid 7.29 percent from a year earlier to 48.54 trillion won in the quarter, and net income fell 7.97 percent to 5.75 trillion won.

Operating profit at Samsung's mobile phone division reduced to 2.76 trillion won in the second quarter from 4.42 trillion won a year earlier.

Samsung rolled out its new Galaxy S series in April, but the new smartphones failed to capture hearts of Chinese consumers. According to market researcher IHS, the company's smartphone share in China dipped to 8.6 percent in the second quarter from 9.8 percent in the first quarter.

Its powerful Chinese rivals raised their market shares. Xiaomi ranked first with an 18.2 percent market share, and Huawei came next with 16.2 percent. It was followed by Apple's 11.6 percent.

Global demand was higher for the curved-screen S6 Edge than the traditional Galaxy S6, but Samsung failed to figure out what consumers want by insufficiently providing the curved-screen models.

Samsung said in the statement that supply issues concerning Galaxy S6 Edge have been addressed. The company increased production of curved screens to meet demand for the S6 Edge.

"The Mobile Business plans to firmly maintain sale of premium smartphones by flexibly adjusting the price of the Galaxy S6 and S6 edge, and launching a new model with a larger screen," the statement said.

Samsung sold 8.9 million units of mobile phones, about 80 percent of which was smartphone sales, in the second quarter, down 6.3 percent from a year earlier, the company said at a conference call after earnings announcement.

Operating profit at the semiconductor business, which produces memory chips and application processors, almost doubled to 3.4 trillion won in the second quarter compared with 1.86 trillion won a year earlier. It was the largest in about five years.

Revenue in the chip-making unit posted the largest-ever 11.29 trillion won in the quarter, topping the prior high of 10.66 trillion won in the fourth quarter of 2010.

The upbeat result was mainly driven by increased sales of smartphone components, including mobile application processors and demand for high-end LSI products, Samsung said, forecasting that the launch of new smartphone models with higher memory density would drive demand in the memory chip market in the second half. Endi