Analysts in South Korea have lowered their expectations for Samsung’s third quarter profit because of the tough market conditions in which Samsung operates. They cite falling ASPs, the absence of any major product launches and the anticipated arrival of Apple’s iPhone 6 as reasons for the negative forecast for Samsung’s mobile and IT business. Similarly, Samsung’s display division is expected to record losses because of low inventories of AMOLED panels for smartphones. The combined average estimate from analysts for Samsung’s operating profit in Q3 is $7.3 billion, 26% lower than the third quarter of last year.
In other news, the South Korean government has warned Samsung, and other major Korean companies, that unless it spends its $60 billion stockpile of cash on wages and investment, or in dividends to shareholders, the company faces a 10% tax on the excess funds. The measure is part of the government’s plan to force Korea’s chaebols to boost household incomes which less than doubled between 2000 and 2012, as corporate earnings increased three-fold.
