Published: Sun, April 07, 2019
Money | By Arnold Ball

Samsung warns first-quarter profits fell by 60 percent

Samsung warns first-quarter profits fell by 60 percent

Samsung's revenue in the fourth quarter of a year ago was 59.27 trillion won, and operating profit was 10.8 trillion won (about $9 billion).

Such was Samsung's concern about the situation, it took the unprecedented step of issuing a pre-guidance warning last month in order to communicate with shareholders as soon as possible.

"Weak demand in the memory chip and display business are expected to have dragged down Samsung's profits, while better-than-expected sales of the Galaxy S10 contributed to earnings in the IT and mobile division", Choi Do-yeon, an analyst at Shinhan Investment & Securities, said.

Samsung enjoyed an up-cycle in memory chips for the past two years that helped it enjoy record profits, which saw its peak in the third quarter of last year.

Revenue likely fell 14 percent from a year earlier to 52 trillion won.

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Analysts said LG's longtime loss generating smartphone business, in the red for seven quarters, and intensifying price competition in the global TV market likely weighed on earnings.

As of 9:38 a.m. Friday, shares of Samsung Electronics are trading 0.2 percent lower at 46,850 won apiece.

"I think this earnings decline will continue for the time being, especially on the memory side", he said, adding that the average selling price for some memory chips could fall as much as 20 percent in the next quarter and continue further declines.

Analysts also say some models from Samsung's premium Galaxy smartphones are also struggling to be profitable due to the rising costs of innovation. Samsung earlier predicted that demand for semiconductors would stay slow until about March. Earnings from memory chip sales accounted for over 70 percent of the total previous year. For the beginning, the new smartphone will be a Verizon-exclusive device (with other major carriers expected to sell it later in 2019), so we'll definitely not see it on the market before May. Mr. Blass shared the info via Twitter in form of a semi-cryptic tweet, while he also added that this will be a Verizon Wireless launch for the device, so it seems like Verizon will be the very first United States carrier to offer Samsung's very first 5G-enabled handset. Last month, Micron said it was curtailing output. Though, the company isn't likely to pick up demand in its memory business, up until the second half of the year.

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