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Thread: Samsung Echoes Apple’s Gloomy Outlook as Tech Woes Get Worse

  1. #1
    Join Date
    Jan 2011

    Default Samsung Echoes Apple’s Gloomy Outlook as Tech Woes Get Worse

    Samsung Echoes Apple Gloomy Outlook as Tech Woes Get Worse

    South Korea tech giant expects fourth quarter operating profit will fall 29%

    Timothy Martin Updated Jan. 7, 2019 9:27 p.m. ET

    The world’s largest maker of smartphones and semiconductors said its estimated profit decline comes “amid mounting macro uncertainties.The Suwon, South Korea-based company pointed to lackluster demand for memory chips and intensifying competition” in its handsets business.
    Samsung struggles come a week after rival Apple Inc. made a surprise cut to its revenue guidance, blaming China slowing economy for weakened iPhone demand. Major tech stocks have slid in recent months, erasing hundreds of billions of dollars in market value, amid uncertainties about the U.S.-China trade fight and slower revenue growth for some of Silicon Valley biggest companies.
    On Tuesday, Samsung said it expected an operating profit of 10.8 trillion South Korean won ($9.7 billion), down 29% from 15.15 trillion won a year earlier. Samsung estimates revenue will decline to 11% to 59 trillion won. The company reports its final results later this month.
    A poll of analysts by S&P Global Market Intelligence had predicted the company would post operating profit of 13.8 trillion won and revenue of 63.5 trillion won for the quarter ended Dec. 31.
    Over the past 18 months, Samsung has delivered a string of record profits, as the proliferation of internet-connected devices and data servers drove up memory-chip prices. But demand has leveled off for smartphones, computers, data servers and other consumer electronics in recent months.
    Smartphone shipments fell by 7% world-wide for the three months ended Sept. 30, compared with the prior year, their fourth straight quarter of declines, according to Canalys, a market research firm. The PC market was hurt by the shortfall in production of processing chips.
    The global trade turmoil has further cooled investment into cloud computing and artificial intelligence—which require vast amounts of data storage and processing power.
    There still is growth in certain areas, but it is not as big of growth as there was in the past, said Patrick Moorhead, president of Moor Insights & Strategy, an Austin, Texas, tech consulting firm. The uncertainty about China is key, and I do believe that these tariffs are starting to make a dent.
    In its disclosure, Samsung said its memory business which has represented about three-quarters of operating profits in recent quarters would remain subdued during the first three months of 2019, though it anticipates results will strengthen by the second half of this year. The company mobile business is leaning on new technological advances to spark a turnaround.
    Samsung, on its recent earnings calls, had cautioned memory-chip pricing was likely to fall at the end of 2018 and into this year. In October, company said it planned to reduce 2018 capital expenditures by more than one-quarter, as it sought to avoid an excess inventory of memory chips.
    The average price for DRAM, which devices use for multitasking, fell 7% to 10% during the final three months of 2018, from the previous quarter, according to DRAMeXchange, which tracks semiconductor prices. Prices for another major type of memory, called NAND flash, which saves music and photos, dropped 10% to 15% over the same period.
    Samsung is the largest maker of DRAM and NAND flash.
    Things could get worse. In the first three months of 2019, prices for DRAM are expected to drop around 20% from the prior quarte the largest pullback in eight years, according to DRAMeXchange. NAND flash prices are expected to see similar declines.
    The memory chip down cycle is expected to be at a much deeper depth than expected, said Lee Seung-woo, an analyst at Eugene Investment & Securities, in a note last week.
    Samsung, which makes about one of every five smartphones shipped globally, saw weak demand last year for its two flagship devices, the Galaxy S9 and the Galaxy Note 9. Consumers viewed the two devices as incremental upgrades over prior models.
    Samsung Electronics shares have declined more than 25% over the past 12 months, as investors were concerned how long the company could cash in on its memory chips business.

  2. #2
    Join Date
    Apr 2009


    I don't know how they could be so stupid as to think it would be any different than the home computer market.........

    Yes, just as when home computers were young, the technology advances provided solid reasons to upgrade, and the market was not saturated. That however, changed as the technology got far enough advanced that home computers pretty much were overkill for any home needs, at that point, people did not see the advantage of spending resources to have the newest, it literally didn't make sense.

    The same is now happening with phones, even my little old Apple SE is way more powerful than I need, so why drop a grand on the latest? If something happens to it, literally 100-150 bucks buys me one that does the same, or slightly more..........

  3. #3
    Join Date
    Jun 2009


    Yep, when you roll that much 90 day paper over and over again you eventually paper yourself into a corner.

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