Business

Samsung’s Q1 2019 earnings guidance suggests a 60% drop in profit

Samsung just released its earnings guidance for the first quarter of 2019, and things don’t look good. The company estimates a 60 percent year-on-year decline in operating profit in the three months ended March. Samsung was already expecting this steep decline, and had issued an unprecedented warning for investors of bad news on the way.

Samsung recorded its highest ever profits in Q3 2018, but weak demand of memory chips has since hurt the company badly. It suffered a 29 percent decline in operating profit in the last quarter of 2018.

Samsung’s worst slump for four years

In a regulatory filing, Samsung estimated sales worth 52 trillion won (about $45.7 billion) during Q1 2019. This is down 11.86 percent from 59 trillion won (~$51.87 billion) in the previous quarter, and down 14.13 percent from 60.56 trillion won (~$53.24 billion) a year earlier. Samsung suffered even bigger drop in operating profit. With an estimated profit of 6.2 trillion won (~$5.45 billion), the company is looking at a 60 percent decline from 15.64 trillion won (~$13.74 billion) in Q1 2018.

According to Bloomberg, this is Samsung’s biggest slump since a similar drop in the third quarter of 2014. Declining prices of memory chips, and lower demand for OLED displays are causing this slump. Samsung has already started reacting to it by putting more focus on non-memory chips and foundry business.

The company recently begun mass producing its 5G chipsets. Samsung would also be hoping the Galaxy S10 5G and the Galaxy Fold to bring a change in its fortune. The former is now on pre-sale in South Korea, whereas the latter will be available starting April 26.

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o0MHJ0o
o0MHJ0o

It genuinely made me laugh when Samsung promised not to release hundreds of different phones every year anymore… And then carried on doing it! The S10 has no place in the market. The S10e should have been the S10 and S10+ should have been the S10 5G. Price them competitively and watch the profit roll in. The general public have finally learnt that there is more to smartphones than Samsung and Apple. You try and please everyone, you please no one. And they’ll have even more decline if they try an do a Note10e and Note10 and Note 10 5G.

warlockba
warlockba

Well, market is saturated, products are bad and overpriced, software support is worse – what can you expect? And to make you life easier, you launch a gazillion of variants, to drain you more money in bad maintenance.
You then top it, by stop listening to your devoted users, and go after review ratings and cloning competitors.
Pure win!

PS: Not only Samsung doing that, but they are one of the hardest to fall – due to the spot they had when they really were standing apart.

hogar
hogar

iPhone uses that OLED Screens and memories. XS and XS Max low demand —finally people is awakening— caused an expected profit drop for Samsung.

Biransahin
Biransahin

The ups and downs of business. 5 years ago they had a huge drop like this and then recovered to record levels. 5 years before THAT, it happened again. The usual business cycle. 5g, 8k tv and IOT will be the next big thing. Until that changes to something else.