Korean firm warns of year-on-year drops
Apple isn’t the only smartphone firm feeling the pinch right now – its rival Samsung has just issued guidance today warning that both revenue and profits for the three months ending December 31st, 2018 will be down when compared to the same time last year. This news comes despite the fact that the South Korean firm recorded its highest ever profits last quarter.
As you might expect, the announcement hasn’t gone down well with investors and analysts, who, according to CNBC, were expecting 13.2 trillion won of operating profit from 62.8 trillion in revenue. Samsung stated that it expects sales of about 59 trillion won – that’s down 11 percent from 12 months prior – and operating profit of about 10.8 trillion won. That’s almost 30 percent down. Yikes.
Samsung has addressed these shortfalls, stating that “lackluster demand in the memory business” and “intensifying competition in the smartphone business” were to blame. Results were also impacted by a “non-recurring expense” which Samsung didn’t specify.
It doesn’t look like things will improve much this current quarter, either. Samsung has said that it expects “subdued” earnings to continue but points out that things should improve later in the year, when it launches its much-hyped folding phone and 5G handsets, both of which are expected to generate significant interest in the industry. Samsung is also confident that its world-leading OLED screens will make their way onto even more phones in 2019.
Ultimately, Samsung and Apple are in the same boat; both sell premium phones and are feeling the pinch from a stagnant smartphone sector and increased competition from brands such as Huawei and Xiaomi. While Samsung stopped short of naming its Chinese rivals as a key reason for a sales slump – something Apple was brave enough to do – it’s obvious that it too is feeling the heat.
Given its status as the leading light in the Android sector – and the smartphone sector in general – it will be interesting to see if Samsung’s 2019 flagships restore the company to winning ways; there certainly seems to be a feeling of stagnation across the whole of the smartphone industry these days, and we’re not sure folding phones and 5G speeds will be enough to end the funk.