Samsung Electronics warned its operating profit could fall a two-year low in the second quarter as it grapples with a slowdown in its smartphone business among other challenges - so are the South Korean tech giant's best days behind it?
The company on Tuesday said operating profit for the April-June quarter likely fell 24.5 percent on year to 7.2 trillion won ($7.12 billion) on slower smartphone market growth, sluggish tablet sales and a stronger won.
The guidance, released ahead of full quarterly results due later this month, is below estimates from a Reuters poll for an operating profit of 8.3 trillion won.
"Samsung is running into some serious headwinds unless they do some dramatic things they face big longer-term challenges," Bob O'Donnell, founder and chief analyst, Technalysis Research told CNBC.
"They are a hardware-focused company, that's their lifeblood. But they need an alternative. If we see the hardware market overall peak in the next year or two, and they don't have a software and services story that's a problem." he added. The company's phone division accounts for over 70 percent of its total earnings.
Samsung faces tough competition in the high- and low-end of the smartphone market, with the swift rise of Chinese smartphone makers such as Xiaomi and Lenovo.