Samsung Plans To Cut Staff In Human Resource, Finances And PR Following A Decline In Profits

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  • 4 years ago
  • Posted: September 9, 2015 at 10:40 am

The smartphone industry is growing very fast and tech companies are on toes to keep up with the growing market. Barely two weeks ago, Samsung launched the amazing Galaxy S6 Edge plus in Kenya. The company has released many devices and they are currently working on developing smart homes to make work easier. However, everyday is not Christmas, the company has been feeling the heat from its competitors. The company wishes to reduce the workforce by 10%.

The affected departments include human resources, public relations and finances. The company wants to reduce its working expenses by 50% come 2016. Samsung is currently the market leader in tech devices but it reported a fall in profits over seven quarters. CNET reports that in July, Samsung posted a net profit of $5.75 trillion won ($4.9 billion) for 2015’s second quarter down 8 percent from the same time period last year.

The main reason why Samsung plans resort to the downsizing measure has to do with the fact that it may face another difficult year in 2015 after the first year for which it saw its quarterly sales revenue fall in 2014.

“The S6 Edge is meaningfully more expensive than the S6 and given that previous [curved screen] devices have not sold well, Samsung was rational in its expectation that the regular S6 would outsell the Edge four to one. Unfortunately, this was not the case as demand has been roughly one to one, leaving a shortage of the S6 Edge and inventories of the regular S6.” Edison Investment Research reports.

Edison Investment Research claims that, part of the weakness in revenue is due to the fact that supply of the Galaxy s6 versions was completely at odds with demand. The s6 edge is meaningfully more expensive than the s6 and given that previous edge devices have not sold well, Samsung was rational in its expectation that the regular s6 would outsell the edge 4 to 1. Unfortunately this was not the case as demand has been roughly 1 to 1 leaving a shortage of the s6 edge and inventories of the regular s6. This is a common occurrence in the handset market where demand is notoriously difficult to predict and hence this is no fault of Samsung’s management. The net result is that overall shipments of the s6 have not been as good as hoped, resulting in the miss reported revenue.

Samsung is battling Apple but other sprouting brands like Huawei and Infinix are gaining ground with their low budget devices that favor everybody.

Also read: Samsung Released Its Galaxy Browser App On Google Play Without Any Official Announcement

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Erick Vateta
Tech Editor at Kachwanya.com
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Erick Vateta is a lawyer by training, poet, script and creative writer by talent, a model, and tech enthusiast. He covers International tech trends, data security and cyber attacks.
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