Samsung Electronic released its second-quarter earnings estimates on Tuesday, and it calls for significant drops in revenue and profits, due to what was reportedly a miscalculation of the demand for their new Samsung Galaxy S6 Edge handset.
The company said that for the June quarter it’s estimating revenue of 48 trillion won ($42.35 billion), down 8.4 percent year-over-year. Operating profits likely fell 4 percent to 6.9 trillion won, or just under $6.1 billion. Final results are due to be published later this month.
While Samsung didn’t break down the numbers by division, a source told the Wall Street Journal that Samsung produced their new Galaxy 6S handsets on the assumption that it would sell four Galaxy S6 handsets for every S6 Edge handset, which is more expensive but features a curved display edge, allowing for more features. In reality, the ratio wound up to be closer to 1:1. This created a shortage of the Edge handsets, while leading to a surplus of the S6, especially the white models.
That claim jibes with an April statement by Samsung mobile head J.K. Shin who announced the company was raising Edge production in order to meet demand. Apple reportedly faced a similar issue with the release of the iPhone 6 and its larger sibling the iPhone 6 Plus. Reports immediately following the launch of the new handsets indicated that Apple had underestimated the popularity of the larger handset, requiring them to adjust their production ratio accordingly.
