Samsung announces Q4 2018 earning guidance, operating profit down 29%

Samsung leads the global smartphone market with a 20 percent share

Samsung expects its quarterly operating profit to fall 29 per cent compared with past year, potentially unsettling a tech sector already skittish about slowing global economic growth.

Samsung estimated profit at about 10.8 trillion won ($9.67 billion) for October-December last year, down 29 percent 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 previous year you sit up and take notice.

"Memory earnings fell significantly. due to weaker-than-expected demand amid inventory adjustments at data-centre customers", which led to a "greater-than-expected" drop in chip prices, it said.

As for the smartphone market, Samsung said it expects to boost its prospects with foldable and 5G handsets.

Samsung shares lost 24 per cent a year ago, capping its worst performance since 2000, as the stock took a beating from sliding chip prices and a slowdown in fresh smartphone demand. At their earnings call overnight Samsung have announced such a drop for them.

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

Analysts say that Apple's woes and Samsung's are indicative of tougher times ahead for global businesses, as dismal growth in the world's second-largest economy, exacerbated by a long China-US trade war, takes a toll.

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

DRAMeXchange anticipates memory chip prices to fall 10 percent on an average in the first quarter. Its earnings report is due on Jan 29.

Moving on to the reasons why, it seems the intensifying competition from Chinese rivals have affected the brand more than initially expected in the smartphone market.

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. "It is not. The smartphone market is already saturated", said senior analyst Greg Roh at Hyundai Motor Securities.

"You see, Apple's iPhones are already losing sales in China".

Huawei CFO Sabrina Meng was arrested in December in Canada at the request of the United States in relation to Iran-related transactions. The wider market was up 0.1 percent rise.



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