Samsung Issues Profit Warning

Samsung and Apple have a lot in common these days. Shortly after announcing their content tie-up at the CES show, the South Korean tech giant followed in the iPhone maker's footsteps by issuing a profit warning. (See Apple's Walls Come Tumbling Down With Samsung TV Tie-Up.)

Apple Inc. (Nasdaq: AAPL) shocked the market last week when it lowered its guidance for the final three months of 2018, citing weak demand for its iPhones in China as a chief author of its woes. (See Apple Delivers Post-Holiday Turkey, Lowers Revenue Guidance, iPhone Upset Leads to Apple Crumble and Apple Really Is in Trouble This Time.)

Now Samsung Electronics Co. Ltd. (Korea: SEC) says its sales for the fourth quarter of 2018 are expected to come in at 59 trillion Korean won (US$52.4 billion), down 11% year-on-year, and its operating profit at 10.8 trillion Korean won ($9.6 billion), down almost 29% from a year earlier.

On average, analysts had been expecting revenues of 63.5 trillion Korean won ($56.4 billion) and operating profits of 13.8 trillion Korean won ($12.2 billion).

The company attributed the unexpected dip to "mounting macro uncertainties," and highlighted "intensifying competition" in the smartphone market and "lacklustre demand" for its memory chips. Its share price dipped by 1.68% on the Seoul stock exchange to 38,100 Korean won. (See Have Devices Overtaken Networks as Huawei's Biggest Unit?)

In December, research company IDC noted that it expected smartphone shipments to drop to 1.42 billion units in 2018, down from 1.47 billion in 2017, but said that it expected the market to grow in 2019.

Samsung is busy showing off its latest products (such as 8K TV sets) and developments at CES in Las Vegas this week, pitching its "Connected Living" proposition that is underpinned by the "Intelligence of Things -- IoT, 5G, and AI working together across devices, to create seamless experiences." (See this press release and 8K TVs to Creep Into US Market in 2019.)

It has also unveiled a new user interface for its smartphones called One UI and is expected to launch 5G smartphones in the near future. (See Samsung reckons its new smartphone UI is more intuitive than ever, Now AT&T Promises Samsung 5G Phone in Spring 2019, Too and Samsung and LG set to launch 5G smartphones in February.)

— Ray Le Maistre, Editor-in-Chief, Light Reading

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