Samsung Expecting Sharp Drop in Fourth Quarter Profits

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

  1. Naraxus macrumors 6502a

    Naraxus

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    #26
    At least Samasung didn’t deceive their investors by boasting a guidence report that was clearly false only to end up with egg on their face
     
  2. tooltalk, Jan 7, 2019
    Last edited: Jan 7, 2019

    tooltalk macrumors 6502

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    #27
    Well, if you are referring to the Chinese regulator's finding last week, no. The Chinese had initially claimed that they had "MASSIVE EVIDENCE" of price-fixing by Samsung, SK Hynix and Micron, but found none.

    So instead they fabricated another anti-trust violation for tying NaND sales to DRAM sales and demanded that (1) the South Korean companies drop all existing patent lawsuits and promise not to sue Chinese companies in the future and (2) prioritize Chinese customers (whatever that means). Or pay $$$. LOL! Not sure what China is going to demand from Micron, but Trump isn't going to just sit back and watch.

    Now, as for Samsung's lower profit, wasn't this all expected? The company just had 5 or 6 consecutive record breaking profit quarters. The stock price of MU, Samsung and other chip makers have been falling in anticipation of lower memory prices for next a few years. They also cut CAPEX on memory production to decelerate the price decline.
     
  3. smirking macrumors 68000

    smirking

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    #28
    If Steve Jobs were still around, Samsung's profits would have increased.
     
  4. jeremiah256 macrumors 65816

    jeremiah256

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    #29
    Original content, with a global delivery infrastructure, to include physical locations (stores) in most major cities that they could perhaps leverage for free advertising by having viewing parties? It's touch to bet against Apple, especially with the money in the bank they have and the relationships they already have with the movie, TV, and music industries.

    Even though I agree with many on this site that they have not paid the attention to their traditional computer division as they should have, they are still a major player for creators in the entertainment industry. They can be average and still be a serious entertainment services provider on the world stage.
     
  5. burgman macrumors 68000

    burgman

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    #30
    Of course it is, he personally stopped buying Samsung memory chips because of weak sakes.
     
  6. az431 macrumors 6502a

    az431

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    #31
    But everyone has been saying that the real reasons for Apple’s revenue warning were greed and lack of innovation, so how can this be?
    --- Post Merged, Jan 7, 2019 ---
    This the MR forum, where facts are ignored and biased conclusions are applauded.
    --- Post Merged, Jan 7, 2019 ---
    Except Apple forecast lower revenues during the last earnings call, whereas Samsung did not.
     
  7. MarkB786 macrumors 6502a

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    #32
    And yet consumer spending is up, according to many news outlets. On what? Two big players are down. Perhaps there is an undercurrent of bad news forming.
     
  8. rafark macrumors 6502a

    rafark

    Joined:
    Sep 1, 2017
    #33
    Correct.

    Samsung has been losing market share in Asia. It hasn't been able to compete against Chinese brands.

    The only real winner here is google because it still has control of the Android OS. Google is the new Microsoft (windows)
     
  9. Shiro_Simba Suspended

    Shiro_Simba

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    Sep 28, 2018
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    London
    #34
    People are Not happy with high phone prices, guess the two companies impacted ? Also when Apple takes a hit, so does one of its major suppliers of components . Criticism still stands , phone prices are ridiculous, let the industry take a hit !
    --- Post Merged, Jan 8, 2019 ---
    How ? For one they are getting too expensive, with prices going up and up , people are going to upgrade every 2-3 years .

    Major flaw in this, is that wearables is not its own product , it’s an accessory of the iPhone . Making it the most expansive product to acquire , needing its own phone
     
  10. theluggage macrumors 68040

    Joined:
    Jul 29, 2011
    #35
    I love it when the first post in a thread is someone pre-complaining about the posts that they're going to disagree with.

    Anyway, no, of course its not Tim Cook's fault that the smartphone and computer market is stagnating. That's been inevitable for a while - even the "China trade war" fears are just the pin that burst the bubble. Anyway, the whole trade war is partly the US trying to stop a flood of cheap-but-good Chinese products that would compete with expensive American (made in China) products (about as advisable as trying to swat a fly perched on your own nose...)

    All tech firms are going to take a beating. The question is, has Tim Cook seen this storm coming and put Apple in a position to weather this storm, or are they one of the bubbles that are going to burst at the first sign of adversity?

    In one way, Samsung has gone down the same path as Cook: they pushed up the price of their "flagship" phones from the $600 mark to the $1000 bracket and saw an unsustainable surge in income - but now face the problem that people who spent $1000+ on a phone aren't in a hurry to replace it after only a year. Unlike Apple, they also make everything from TVs to fridges to who-knows-what industrial goods, as well as more affordable smartphones and parts for other people's affordable smartphones.

    Apple, on the other hand, have made themselves very, very dependent on those $1000 phones and have been pursuing a policy of driving up all their other prices from "premium" to "luxury". They've built themselves a nice new HQ and got stuck on the tar baby of autonomous cars, but haven't come out with the next iMac/iPod/iPhone - except the Watch which they've made highly dependent on also having that $1000 smartphone, and which faces huge competition from cheap fitness-trackers.

    Memory chips are a commodity - if a big customer cuts demand then all prices are liable to fall. But no, its not just Apple, its a market-wide slump of which Apple is part.
     
  11. chooyoshi macrumors member

    chooyoshi

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    Aug 5, 2018
    #36
    Remember that Samsung is more than just an electronics manufacturer. It builds ships and towers, sells insurance, and even makes cars. Samsung is literally the heart of South Korea's economy. Worst case scenario the South Korean government will have no choice but to bail it out
     
  12. Remy149 macrumors regular

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    Oct 20, 2016
    #37
    Apple doesn’t use samesing memory
     
  13. NetMage macrumors member

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    Oct 21, 2007
    #38
    If Apple sold no iPhones, they would still be the most profitable PC manufacturer. And iTunes would still sell the most digital music. So, no?
     
  14. willmtaylor macrumors G3

    willmtaylor

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    #39
    Samsung is the chief provider of the OLED panels though, so give all the snark you like, but the two companies are inexorably intertwined.
     
  15. jarman92 macrumors 6502

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    #40
    Except Samsung explicitly cited a decline in memory chip demand as an explanation for the miss; they said absolutely nothing about display panels, OLED or otherwise.
     
  16. willmtaylor macrumors G3

    willmtaylor

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    #41
    It doesn’t really matter what was or wasn’t explicitly mentioned TBH. The point being, if iPhone sales are down, Sammy’s profits will be as well.
     
  17. Analog Kid macrumors 601

    Analog Kid

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    #42
    The article was written yesterday and updated 4 hours ago as of my post, so I'm not sure exactly what it looked like when others read it. That said, Samsung made it clear that they see the problem as being about chip sales, and memory chips in particular into 2019. Reuters added some additional commentary that tried to tie it to Apple (despite other evidence to the contrary) and

    Samsung: profits declined due to weak chip demand
    Samsung: chip demand driven by data centers
    Samsung: unspecified "macro uncertainty"
    Samsung: stagnant and competitive smartphone market pressuring revenue

    Reuters: data center demand mostly from US
    Reuters: Samsung smartphone market share in China is less than 1%


    Reuters: chips are 75% of Samsung's profit
    Reuters: Samsung chips power Apple and Huawei handsets
    Some guy from Hyundai: iPhones not selling well drags down chip prices
    iFixit: Samsung RAM/Flash chips aren't used in the iPhone 8, X, XS, or XR

    Try as people might, this hardly seems like an Apple story at all. If this has anything to do with Apple, it's that the last iPhones (7 series) using Samsung memory are almost completely phased out-- but that's got to be a trivial impact on the quarter.

    The story is a slowing demand for memory chips and with a sidebar that the smartphone market appears to have plateaued for both Apple and Samsung.

    According to Oracle, which had every reason to inflate the numbers, Google makes something like $3B a year from Android and that's not because they sell the OS but because they own the advertising and app sales channels. A tidy little business to be sure, but compare that to Apple's numbers.

    Personally I think it's a matter of time before Samsung gets tired of competing with the Google Pixel in their most profitable market segment and forks Android for themselves.

    I'm not sure what you're basing that on, but if it were true as a rule wouldn't it make more sense for Samsung to promote rather than compete with iPhone?
     
  18. willmtaylor, Jan 8, 2019
    Last edited: Jan 8, 2019

    willmtaylor macrumors G3

    willmtaylor

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    #43
    NDA’s with suppliers are SOP.

    P.S. Samsung promote Apple? Can I have some of whatever it is you’re smoking?
     
  19. Analog Kid macrumors 601

    Analog Kid

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    Mar 4, 2003
    #44
    Isn't that what your comment suggests? If declining iPhone sales is causing declining Samsung profits, then Samsung should stop targeting negative ads at their profit maker...
     
  20. willmtaylor macrumors G3

    willmtaylor

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    #45
    Let me explain this with an example.

    If I make and sell a widget and profit $10 from it, but I also make parts for widgets, and sell them to you for $3, then I make money in both instances, but I’d still rather customers buy my widgets.
     
  21. Analog Kid macrumors 601

    Analog Kid

    Joined:
    Mar 4, 2003
    #46
    Ok, that was my point. Selling less iPhones only means less profit for Samsung if they aren't replacing those sales with Galaxies or even with Huawei's which buy the same memory.

    In other words, it only means less profit if the demand for Samsung components as a whole contracts and not specifically because of a change in demand for Apple.

    All three of the quotes you refuted were making the point that there's little to tie Samsung's 30% drop in profits to Apple's warning. Samsung primarily attributed the decline to weak demand for chips, and more specifically a change in data center inventories. Memory and processors are 75% of Samsungs profit. Apple's last iPhone to use Samsung memory was the 7 and 7s which account for 12% of Apple's overall sales.

    Your other point was that Apple uses Samsung displays. Samsung is now one of two providers of displays to the high end OLED based phones which account for 35% of Apple's iPhone sales. Earnings for display products (DP) are reported separately from Semiconductors, and misleading investors is a serious offense, but I suppose it's possible for Samsung to manipulate their internal accounting to make a loss of display revenue look like a loss of memory revenue to justify the statements they made. Not sure why they'd go through that though rather than just say "display demand is down".

    Finally, Apple just reduced their revenue guidance by approximately $6B. Something like half of that revenue would have to go straight to Samsung's bottom line to account for their profit miss. Account for the fact that Samsung makes 13 times more profit in semiconductors (almost entirely from memory) than they do in displays, and they do it at twice the margins, and it's nearly impossible for a 6% decline in sales from a non-memory customer to have a material impact on their bottom line.


    All of which is a long and detailed way of saying: pointing out that Apple isn't the reason for Samsung's profit drop was a perfectly reasonable thing to do.
     
  22. Analog Kid macrumors 601

    Analog Kid

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    Mar 4, 2003
    #47
    Samsung Group is a massive conglomerate, and I can't find much in the way of a consolidated account, but best I can tell by looking at the biggest components (Samsung Electronics, Engineering,Heavy Industries, C&T, Insurance, etc) Samsung Electronics accounts for about 90% of the profit and that's the company that this thread is about.

    Samsung Electronics makes smartphones, memory chips, display panels, dishwashers, TVs, air conditioners, etc... This is what most people think of as "Samsung".

    77% of Samsung Electronics' profit comes from semiconductors, 85% of semiconductor sales are memory.

    By contrast, only 60% of Apple's sales come from iPhone (Apple doesn't appear to break out profits). Samsung isn't much more diversified, really.

    If the smartphone market crashed, Samsung would continue to survive because they only get a small fraction of their profits from smartphones. If the memory market crashed, they'd be in serious trouble. That's why their profits are down 30% this quarter.
     

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