Samsung Expecting Sharp Drop in Fourth Quarter Profits

Discussion in 'iOS Blog Discussion' started by MacRumors, Jan 7, 2019.

  1. MacRumors macrumors bot


    Apr 12, 2001

    Samsung today said in a regulatory filing that its earnings for the fourth quarter of 2018 have likely dropped sharply due to weak memory chip demand and growing competition in the smartphone business.

    As noted by Reuters, Samsung's operating profit for the three months ending in December was at approximately at 10.8 trillion Korean won, aka $9.67 billion, well below the 13.2 trillion won predicted by analysts and a 29 percent drop from the year-ago quarter.


    This marks Samsung's first decline in quarterly operating profit in two years, with more detailed information set to be announced during Samsung's earnings in January.

    The news about Samsung comes after Apple last week announced that it was lowering its revenue guidance for the first fiscal quarter of 2019, aka the fourth calendar quarter. Apple cited a number of reasons for the guidance downgrade:

    [*]iPhone XS, XS Max, and XR launch timing compared to iPhone X timing in 2017
    [*]A strong U.S. dollar
    [*]Supply constraints on Apple Watch Series 4, iPad Pro, AirPods, and MacBook Air
    [*]Economic weakness in emerging markets, specifically China
    [*]Trade tensions with China
    [*]Lower than anticipated iPhone revenue, primarily in China
    [*]Weak iPhone upgrade numbers in some developed markets due to fewer carrier subsidies and low-priced battery replacements in 2018

    Apple lowered its guidance to $84 billion, down from the $89 to $93 billion guidance that was shared in November. At $84 billion, Apple will see a year-over-year revenue drop in 2019 after pulling in $88.3 billion during the first fiscal quarter of 2018.

    Article Link: Samsung Expecting Sharp Drop in Fourth Quarter Profits
  2. LaraCroft835 macrumors member


    Apr 22, 2014
    Adelaide, Australia
    this will be fun and interesting to read the comments from those highly critical of Apple and Tim Cook the other week. Let the spin begin.
  3. I7guy macrumors P6


    Nov 30, 2013
    Gotta be in it to win it
    Wasn’t expecting this interesting news. But I agree it will be interesting to see the comments that follow.
  4. ImAnAgent macrumors regular


    Oct 11, 2018
    My mind
    as the article points out, much of this is due to Apple's lower demand for iPhones.
  5. nwcs macrumors 68000


    Sep 21, 2009
    I guess this is Tim Cook’s fault as well, according to some. Reality is smartphones have hit market saturation and either need to be reinvented or fade away in favor of something better (whatever that is).
  6. jeremiah256 macrumors 65816


    Aug 2, 2008
    Southern California
    High expectations vs low expectations. One company, I actively avoid their products. The other, I'm invested in due to their products that I own, and the respect I have for them over the many years I've followed their company.
  7. noraa macrumors regular

    Jun 23, 2003
    Nowhere in the article is anything like that mentioned.
  8. HiRez macrumors 603


    Jan 6, 2004
    Western US
  9. Zenithal macrumors 604

    Sep 10, 2009
    Reality is all smartphone companies except native Chinese will have problems in the next few quarters, not just the next one. The other reality is that thanks to Apple, flagship Androids have gone up in price, often times just trailing what an iPhone variant costs. In a perfect world, wages/salaries would go up in unison with the higher CoL and luxuries. It's alright to call an iPhone a luxury item, but so is a $650-1000 Android handset.
  10. cljmac macrumors newbie

    Jul 9, 2002
    I know a regional Samsung guy and they are high double digit down in sales in tablets in retail stores. Flat on phones. Down on watches. Flat on appliances and TVs.
  11. smorrissey macrumors 65816

    Mar 12, 2015
    It is indeed.
  12. tbayrgs macrumors 603


    Jul 5, 2009
    Let’s see if the tech world and investment analysts lose their **** about this as they did last week regarding Apple. I doubt it.
  13. Infinite Vortex macrumors member

    Infinite Vortex

    Mar 6, 2015
    I hope all of the manufacturers of $1000+ phones are going to hurt this quarter. What's worse for Samsung, and like they get hit by a double whammy, is that they sell memory and other components to everyone else, like Apple, who are having a crap time of it. So they lose at multiple ends.

    And that'll teach them to not make OLED TVs. :rolleyes:
  14. Zenithal macrumors 604

    Sep 10, 2009
    Samsung is also getting fined for RAM price fixing. As are SK Hynix and a bunch other companies that produce components for companies such as Apple and individual units for resale. Also doesn't help that SSD tech is getting cheaper and they can't exactly surge the price.
  15. usarioclave macrumors 65816

    Sep 26, 2003
    You know, when people say that the high-end market is saturated and that the upgrade cycle is now 2-3 years that only means that growth will slow. Apple still is going to sell like $50bn + of iPhones this FY, which is still a massive number of phones.
  16. Abazigal macrumors G4


    Jul 18, 2011
  17. Dario69, Jan 7, 2019
    Last edited: Jan 7, 2019

    Dario69 macrumors member

    Sep 11, 2017
    I am expecting to hear crickets if even that. It doesn’t fit the narrative the arm chair quarterbacks or CEOs that populate this forum gravitate to. If anything it helps negates the several 400, 500 responsed threads that end up in “I told you so” grandstanding. So I expect mostly silence or “But, but, but Apple....” type of replies.

    So much bile and negativity in these Mac forums lately. The iPhone sub forum is good example. The business related topics are consuming that forum. The moderators need push that stuff off more. I am visiting this website’s forums less and less now because it is all about Apple needing to do this or Apple needing to do that. Air your greviences in the right sub forum people. I want to read about hardware and issues, not personal pet peeves with Apple because you think your phone costs too much. Not that I don’t disagree but find the right sub forum or thread to air your greviences. It seems like every thread is about this now.

    Sorry, I digress. Yes, let the spin begin :)
  18. jeremiah256 macrumors 65816


    Aug 2, 2008
    Southern California
    True, but lower sales will be reflected in their stock price. And a lower stock price hurts shareholders, and employees receiving stock as compensation.
  19. NervousFish2 macrumors regular


    Mar 23, 2014
    The emerging sense here is that there is a demand crunch in the Chinese economy. This is likely being caused by a number of factors driving layoffs and reduced hours, which means workers have less money to spend on conspicuous consumption items. In a short-term sense, I think the big factor would be layoffs from Trump's so-called trade war. But the bigger factor is that the global economy simply hasn't been performing, since 2008. We are way too invested in financial markets, and firms like Apple are sitting on way too much cash. In the past, a decline in Chinese domestic demand wouldn't have effected western firms like Apple so much. But it speaks volumes to where we are now, with the impact of globalization on economies.

    The big tech firms, like Apple, need a new "big thing." Thing is, it likely won't be a big consumeristic "thing" like the iPhone. Possibly, if government were to lead the way on it, the next big thing would be an industrial revolution in environmental technologies. Apple and other companies might have a lot to contribute, on this front...

    Hear me out: So far, we’ve only attempted market-based solutions (cap and trade, consumption taxes, etc) to global warming. We’ve focused on the idea of adding taxes on human activity, with the view that ‘doing less’ human activity is the solution. Of course it won’t work. Human demand for human activity is quite understandably inelastic! No wonder ppl reject it. As the gilets jaunes in France represent, people see that the market-based solutions hit the poor the hardest. The narrative we’ve been afraid to try is: MORE human activity. And that’s the basis of the so-called green new deal. A stimulus-based approach, which has the added virtue of kick-starting a new era of productive jobs in the global economy. Right now, global demand is still weak from 2008. Because we haven’t learned the lessons of 2008, the real money is still in finance. Large corporations are sitting on piles of non-productively invested cash, for lack of demand. Salaries are very low, in real terms, compared to what they were in the 30 years after WWII. The gap between rich and poor has not been as wide as this, since the gilded age — except it’s worse for us. These are the facts. Meanwhile, the effects of global warming are also disproportionately effecting the poor. And so the situation cannot endure. We need a green new deal, which starts with the proposition a whole generation people shouldn’t be abandoned to live paycheck to paycheck, but which furnishes the solution to our globally weak economy with a massive GREEN jobs program.

    A green new deal. Like FDR’s new deal, except focused on converting our energy generation and transmission, our transportation, and our waste management, to a carbon neutral basis. Secondly, to begin a serious effort to re-sink atmospheric carbon into the earth; in Iceland they have a system which, if scaled, can use sea water to turn atmospheric carbon into limestone blocks. To do this on a widespread scale however, is the trick. None of this will be achievable without a massive public investment plan, however. Which means it will be costly, and corporations won’t want to do it. What we’ll need to remind ourselves however is that taxes used to be much, much higher, in the new deal era. And much of the global prosperity of the 50s and 60s came from this. From the USA to there UK to Norway to India, demand stimulation came from public-led programs. These reduced inequality, extended lifespans, increased happiness, and also set the basis for the success of future generations. All of this has been unraveling slowly since the 1970s, because of neoliberal technocratic dithering. We’ve lost faith in the idea of collective action. We do everything thru market-based solutions now. Which means, of course, that today we solve only the problems from which short-term profits can be made. I think so long as this short-termism prevails, we are doomed.

    The current likely collapsing bubble in tech stocks is symptomatic. We need government to lead the way, with a new deal, if tech jobs are to survive. We need a new, green revolution in demand-side economics.
  20. Junior117 macrumors regular

    Apr 9, 2015
    Toronto, Canada
    So I guess Samsung is doomed along with Apple, right?

    ... right?
  21. LaraCroft835 macrumors member


    Apr 22, 2014
    Adelaide, Australia
    “We expect earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business,” it said.

    On Tuesday, the South Korean tech giant said weaker-than-expected demand from some of its data center customers adjusting inventories drove down chip prices and hurt earnings. It did not identify the customers

    “Poor chip sales to Chinese major cloud companies raised Samsung’s inventory level which led to chip price declines,” said analyst Kim Young-woo at SK Securities.

    “Second- and third-tier Chinese smartphone makers saw drastic drops in their sales, which also took a toll on chip demand,”

    Samsung’s memory and processor chips, which account for over three-quarters of its earnings and about 38 percent of sales, power smartphones including those from China’s biggest handset maker Huawei Technologies Co Ltd [HWT.UL].

    It also estimated an 11 percent on-year revenue decline at 59 trillion won.
    Nothing referring to Apple

    thanks Reuters
  22. jarman92 macrumors 6502

    Nov 13, 2014
    Apple doesn’t use Samsung memory chips so idk where you’re getting that from...
  23. usarioclave macrumors 65816

    Sep 26, 2003
    I sold my Apple stock already, but yes. Cook is pushing ecosystem sales as the new growth platform, but can it get to 60bn a year?
  24. MyMacintosh macrumors 6502


    Aug 10, 2012
    Notice how no mention of China like apple? I would assume pricing of these phones are just ridiculous to most people now.
  25. NIKKG macrumors 6502


    Feb 23, 2012
    Unlike Apple, Samsung makes ships and many other products, they are highly diversified. Even if the whole smartphone market completely crashed, they will still be around. Apple on the other hand is completely depended on iphone and other itoys.

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