Despite technological trends across the globe, Samsung Electronics warned of weaker sales in 2016 compared to last year. The company is set to struggle with earnings because of decreased sales of gadgets such as smartphones.
The announcement follows that of Apple's decrease in sales for the first time in more than a decade. Apple announced that shares fell more than 6.5 percent, the biggest percentage drop in two years.
The South Korean firm, whose quarterly profit did not meet expected earnings by nearly 40 percent, said that the low sales were caused by the waning global economy. This led to decreased demand for most gadgets including smartphones and computers.
In a message to employees, Kwon Oh-hyun, Samsung's chief executive, warned that growth in the company will continue to be slow over the next 12 months. He blamed the company's expected decreased sales on weak economies and growing competition.
According to the company, they shipped 97 million handsets and 9 million tablets in the holiday quarter. Despite this, its shipment of handsets grew just about 0.8 percent due to rivals from both high-end and budget categories. Tough competitors such as Apple, Huawei Technologies and China's emerging Xiaomi Corp. added to the company's struggle.
"Expecting challenges in 2016 to maintain earnings due to a difficult business environment and slowing IT demand, the company will strive to improve performance in the second half, by capitalizing on strong seasonal demand for set business products and enhancing the product mix in components business," Samsung said in its 2015 year-end report press release.
To cope with the challenges in the next couple of months, Samsung plans to secure productivity for each of its business units. It plans to launch new areas in the business and boost sales of its mobile business, which includes its best-selling and flagship products. It also plans to improve and strengthen the competitiveness of its hardware, software services and wearable products.
The company predicts challenging business situations in the first quarter of 2016 due to feeble seasonal demand and struggles in the IT business. To address these, it plans to concentrate more on increasing the quantity of value-added merchandises and launching new products to boost sales and earnings.
Photo: Kārlis Dambrāns | Flickr
