If you thought that Apple was the only major tech company with some unexpected losses for the end of 2018, first of all: That’s an awfully specific thing to be thinking. Secondly, Samsung is now also reporting that it’s expecting a decline in revenue and profits for the quarter ending 31 December 2018.
The tech giant released new guidance to investors, saying that it was going to miss expectations for revenue and profits for Q4 2018. Samsung said that reduced demand for product from its memory/RAM division and increased competition across the smartphone sector are to blame for the decline.
The company’s revenues are expected to be down year-on-year by just under 11%, coming in at around $52.5 billion. Profits for the period are also going to be down from a year ago, by 28.7% to come in at $9.67 billion. Not small change but when it’s lower than expected…
Samsung may seem to be having similar issues to Apple but there’s one major difference — Samsung’s memory division — partly responsible for the hit the company has taken — is a division that other companies don’t have. If the company isn’t selling enough memory to competitors because those competitors aren’t selling enough phones (and other things that require RAM), Samsung’s gonna have a bad time.
Managing director at Sanford C. Bernstein Mark Newman, speaking to CNBC, said that “…suddenly, what’s happened is data center companies such as Amazon, Microsoft, Google … these companies suddenly have enough memory, and they stopped ordering. And that has really been one of the major stumbling blocks for these memory companies.”
Samsung’s predicting a less-than-stellar first quarter in 2019 but an uptick in revenue is expected by mid-year, thanks to new devices (toting 5G and folding displays) and improved demand for its smartphone OLED screens. Gee, we wonder who’ll be buying those…?
Samsung is expected to release its full earnings report later this month. We’ll pick up some more detail about what’s going on in the company when that report drops.