Tech giant’s latest profit guidance sent shockwaves through investors as it indicated fourth-quarter profits could take a steep tumble. Mainstay memory chips used by devices such as smartphones and computers.
South Korea’s top chipmaker reported estimated October-December operating profits likely decreased 35% year-on-year versus its Refinitiv SmartEstimate of 3.7 trillion won, and will release detailed earnings results on January 31.
Profit
World’s biggest chipmaker and smartphone maker forecast its fourth-quarter profit to decline by more than one-third as weak demand for electronics devices and memory chips weigh on its bottom line. Operating profit in October-December period may reach $2.1 billion, which falls well short of Refinitiv SmartEstimates from 20 analysts who had projected it at 4.3 trillion won ($4.8 billion).
Global demand for smartphones and other electronic gadgets has fallen precipitously as consumers postpone purchases due to slow economic growth and concerns regarding data privacy and cybersecurity. Some of the worst losses have been experienced by Apple Inc, which is experiencing double-digit decrease in sales this year.
Still, Bain anticipates that sales and profits for manufacturers like Samsung will see an uptick during the second half of 2018, according to TrendForce research firm. That could signal a rebound of chip prices which have dropped due to oversupply and slow demand.
Revenue
Samsung Electronics, one of the world’s biggest tech firms, is best known for its Galaxy smartphone line-up that competes directly with Apple’s iPhones. But this South Korean chaebol (family-controlled corporate conglomerate) does much more.
Samsung expects its chip business to report a profit loss for the quarter as global inventories weigh on memory chip prices, yet demand and prices should rebound thanks to data centre clients over the course of 2019.
Samsung Electronics expects its revenue to decrease due to weak smartphone and TV sales, but energy and IT services businesses could improve in line with increased rechargeable battery and cloud computing power demand. The warning came just ahead of CES 2019, an annual consumer tech trade show which serves as an indicator for global tech industry health; further evidence that Samsung, like many of its rivals, has been hit hard by consumer spending reduction and softened memory chip demand.
Shares
Samsung Group, with headquarters in Seoul, South Korea, is a multinational conglomerate active across many sectors such as electronics, semiconductors, insurance and ship building. Furthermore, they produce air conditioners, televisions, refrigerators, microwaves and cameras among many other products.
Samsung Electronics’ shares are listed on the Korean stock exchange, while it still retains control of most of its subsidiaries. Samsung Electronics stands out as being an industry-leader when it comes to manufacturing dynamic random access memory chips that are widely used in devices like smartphones and computers.
An employee from Samsung explained how its products can be found in every aspect of our daily lives: sleeping on a Samsung bed, buying clothes from C&T Fashion Group stores, dining at one of its Welstory restaurants, attending one of its affiliated high schools or universities, driving Renault-Samsung cars, receiving medical care at hospitals affiliated with Samsung, paying with credit cards issued by them, or getting insured through Samsung Life are just some examples. Samsung itself boasts multiple subsidiaries producing everything from washing machines to artificial intelligence technologies.
Analysts
Samsung is one of the largest and leading consumer electronics companies, producing products ranging from smartphones and tablets to televisions and refrigerators. Additionally, they produce semiconductor chips and LCD screens.
Established by Lee Byung-chul in 1938 as a small trading firm, this enterprise eventually expanded into textiles, insurance, securities, construction, shipbuilding and IT services.
Earnings warning from Qualcomm comes at the same time that CES 2024, the world’s premier tech trade show, begins in Las Vegas. The event showcases ground-breaking innovations like AI-powered robots, foldable phones and electric cars.
Samsung Electronics predicts its operating profit to fall significantly below analyst consensus estimate in its October-December quarter, to an expected figure of $2.8 trillion won ($2.13 billion). The lower profit projection stems from weak demand for memory chips and mobile devices as well as intense competition from Apple and Huawei, namely.
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