Samsung warns of sales and profit decline

Samsung warns of sales and profit decline

Samsung warns of sales and profit decline

Samsung Electronics on Tuesday said it expects its quarterly operating profit to fall almost 29 percent lower than the year-ago period, just one week after Apple rocked markets with its lower-than-expected revenue for the critical holiday sales period.

South Korea's LG Electronics said on Tuesday (Jan 8) its fourth-quarter operating profit likely plummeted 80 per cent from the same period a year earlier, falling well below analyst expectations.

It expects fourth-quarter sales to drop nearly 11 per cent from a year ago, to 59 trillion won ($52.4 billion).

In a short press release, Samsung said the expected consolidated sales are approximately KRW59 trillion, while the operating profit should be around KRW10.8 trillion.

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"We expect earnings to remain subdued in the first quarter of 2019 due to hard conditions for the memory business but strengthen in the second half", it forecast.

"Memory earnings fell significantly. due to weaker-than-expected demand amid inventory adjustments at data-center customers", it said.

Samsung make memory and processor chips for companies including Apple and Huawei phones with these sales accounting for close to 40 percent of their overall sales.

Slowing demand, including from China, is weighing on the wider sector.

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The warning, which comes ahead of Samsung's latest financial results later this month, will spark new fears of a slowdown in the tech market which has already seen precipitous drops in many companies' share prices.

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

While Samsung leads the global smartphone market with a 20 percent share, it faces mounting competition from Chinese rivals like Huawei - which surpassed Apple to take second place a year ago - offering quality devices at cheaper prices.

Prices for DRAM chips, which provide devices with temporary workspaces and allow them to multitask, declined 10 percent in the fourth quarter, according to industry tracker DRAMeXchange. Its smartphones are also facing greater competition.

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The tech giant's reputation suffered a major blow after a damaging worldwide recall of its Galaxy Note 7 devices over exploding batteries in 2016, which cost the firm billions of dollars and shattered its global brand image.

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