Samsung To Fall Short Of Earning Forecasts

Technology company Samsung is likely to miss its expected operating profit levels in the period April to June.

Samsung previously forecast a profit of 7.2tn (£4.1bn) won, but have now said that this is likely to fall to 6.9tn won (£3.9bn) after disappointing sales of its newest smartphone.

The drop means that profits could be as much as 4% lower than they were in the same period last year.

The company has seen its profits suffer in recent years due to increased competition from both US giant Apple (NasdaqGS: AAPL - news) and Chinese companies such as Xiaomi who have targeted the mid-to-low priced mobile phone market.

Samsung launched its Galaxy S6 and S6 Edge smartphones in April of this year to rave reviews from critics, but sale numbers failed to reach expectations due in part to production issues.

The share price, which has fallen 7.2% this year, closed with a 0.8% rise on Tuesday despite the earnings estimate, perhaps due in part to the ruling by a South Korean court to allow a £5bn merger between two Samsung Group companies to go ahead.

A US hedge fund which owns just over 7% of construction firm Samsung C&T Group, Elliott Associates, had argued that a proposed offer from Cheil Industries Inc to buy all C&T stock undervalued the company.

Cheil Industries Inc is the Samsung Group’s de facto holding company.

Elliott Associates had gone to court in an attempt to block a shareholder vote on the merger, which is widely seen as part of the preparations within the Samsung Group to transfer power from the ailing patriarch of Samsung’s founding Lee family, Lee Kun-Hee, to his only son Lee Jae-Yong.

As the power transfer could involve a huge inheritance tax bill the Lee family is said to be attempting to simplify its holdings and merge its interests where possible.