GO
Loading...

Samsung earnings fall for a second straight quarter

Samsung Electronics on Tuesday said profit fell for a second straight quarter as sales in its smartphone division continued to dip.

The tech giant posted a 3.3 percent fall in first quarter operating profit to 8.5 trillion won ($8.2 billion) from the year ago period, just above its guidance of 8.4 trillion won. Profit in its key mobile division reached 6.43 trillion won, down an annual 1.2 percent.

But Samsung is tipping better performance in the current quarter, betting that its flagship Galaxy S5 mobile, launched last month, will outsell its predecessor.

Read MoreThis is how much Samsung's Galaxy S5 costs to build

Still, analysts say the South Korean firm's mobile business faces a challenging year ahead.

"[The fall in handset sales] is the worry as it's a cash cow. While we saw some encouraging signs how the Galaxy S5 may be doing in the upcoming quarters there's obviously an increase in pressures from the price perspective as well as the marketing costs," said Bryan Ma, vice president of IDC Singapore.

Getty Images

While Ma is optimistic that Samsung's mobile business will continue to drive earnings in the short term, it's unclear where that's headed in the longer-run.

"The signs that we were already seeing around Galaxy S5, frankly the comments were better than I expected. In that sense, they do have a pipeline in front of them but that's short-term. The concern is more long-term whether they are going to have anymore real innovative products that's going to change the world," Ma said.

Mehdi Hosseini, a senior analyst at Susquehanna Financial Group, believes Samsung needs to look beyond banking on its smartphone business.

Read MoreApple vs Samsung: Why this trial will be harder for Apple

"Handsets are not going to be the main driver [of earnings] in the long term," Hosseini told CNBC just ahead of the Samsung earnings release.

"It's going to come down to enabling other growth areas like storage. If Samsung could build a model around storage, which is a sub segment of some of their core competencies, the growth will come in," he said.

Shares of Samsung fell 1 percent following news of its earnings.

Symbol
Price
 
Change
%Change
USD/KRW
---
593
---

Featured

Contact Earnings Central

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More