Published: Wed, January 09, 2019
Markets | By Otis Pena

Samsung posts Q4 guidance, profit goes down 38%

Samsung posts Q4 guidance, profit goes down 38%

With smartphone sales slowing and memory chip demand on the decline, industry analysts already expected a drop in profit for Samsung.

Samsung, in a regulatory filing, estimated profit at 10.8 trillion won (S$13.1 billion) for October-December last year, down 29 per cent from the same period a year earlier.

Earnings calls are not something we normally keep a close eye on here at Ausdroid but when you see the biggest brand in Android drop 29 percent compared to the same time a year ago you sit up and take notice.

Samsung once also had a 20 per cent market share in China but has seen its sales tumble to less than one per cent of the world's largest smartphone market in the third quarter, and last month announced the closure of its factory in Tianjin.

Electronics giant Samsung has warned that it expects to report a sharp fall in quarterly profit and painted a grim outlook amid tough competition and falling chip prices. The guidance, released Thursday ahead of full earnings later this month, didn't provide specific divisional results but did offer some clues as to how some divisions have performed, specifically its memory and mobile businesses.

Prices of NAND flash memory chips, which hold data permanently, slipped 15 percent.

Demand for DRAM memory chips "will hit a low in the fourth quarter of 2019", he told AFP news agency.

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"We expect earnings to remain subdued in the first quarter of 2019 due to hard conditions for the memory business but strengthen in the second half".

Samsung said the memory market is likely to improve from the second half of the year due to the adoption of new central processing units as well as smartphone launches.

Turns out Apple is not the only company expecting to disappoint investors with its next set of quarterly results - Samsung and LG are in the same boat.

"Apple's iPhones have not been selling well in China at least since Huawei's chief finance officer was arrested".

While Samsung leads the global smartphone market with a 20 per cent share, it faces mounting competition from Chinese rivals like Huawei - which surpassed Apple to take second place previous year - offering quality devices at lower prices. The firm has said it was not aware of any wrongdoing.

Samsung's shares fell as much as 2.1 percent before paring losses at midday in Seoul. The wider market was up 0.1 percent rise.

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