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Samsung cuts profit forecast for quarter

Samsung Electronics may be having the same problem Apple has: Nearly everyone in the world who can afford an expensive smartphone has one already.

Samsung, the largest maker of consumer electronics, said Friday that it expected weaker profit and revenue, which analysts attributed to slowing sales of high-end smartphones. This is a trend that also bedevils Apple, its main rival.

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Samsung, the number one maker of mobile phones, aims its Galaxy models at the top end of the market. Apple sells its iPhone to these customers too. And while sales of smartphones continue to grow overall, the rate of increase for the more expensive devices has been easing in recent months.

For Samsung, the real problem may be that much of the growth in smartphone sales in coming years will be at the lower end of the market, where Chinese manufacturers are gaining share.

Samsung simply does not have the most appealing models for those consumers. As smartphones become increasingly commoditized, prices will fall and profit margins will shrink.

“The concern is the future of the smartphone market, which is already saturated at the high end,” said C.W. Chung, an analyst at Nomura Securities. “The smartphone industry may be becoming more like the PC industry,” in which consumers make their buying decisions mostly on price, despite attempts by manufacturers to differentiate their products.

Samsung said it expected to post an operating profit of 9.5 trillion won, or $8.3 billion, for the second quarter of the year, a 47 percent increase from a year earlier.

While many companies would envy such a growth rate, the forecast disappointed financial analysts, who had, on average, expected Samsung to post an operating profit of more than 10 trillion won in the April to June quarter.

Even before the news Friday, some analysts downgraded their forecasts for Samsung. Samsung Electronics shares are down about 17 percent since the beginning of the year. (Apple shares are down about 21 percent in the same period.) Samsung shares dropped 3.8 percent on Friday in trading in Seoul.

Samsung’s overall estimated revenue grew strongly in the second quarter, rising 20 percent, to 57 trillion won. But that, too, was slightly below analysts’ expectations.

“With Samsung, the market had gotten used to upside surprises,” Chung said. “But the previous quarters were abnormal. People need to adjust their focus.”

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