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It's this time again, Samsung, which has announced forecasts for the coming quarter – and things are not looking good.
Samsung expects revenue for the quarter to reach KRW 51,533 billion ($ 44.87 billion to $ 46.63 billion), down about 15 percent from a year earlier. The Korean tech giant has announced record operating profit in the first quarter of 2018 – $ 13.76 billion – but this time, it is expected to fall 60% for the current quarter. According to Bloomberg, this would be the company's worst recession in four years.
After a record year, it will never be easy, but the operating profit forecast for the first quarter of 2019, from 6.1 to 6.3 billion KRW – about $ 5.5 billion – represents a fall fairly strong 43% compared to the previous quarter. This will worry Samsung shareholders.
The company's earnings guidance does not go into the specifics of the forecast, but last year's record earnings were largely driven by the success of its consumer handset business and the strong chip market. memory. There have been many warning signs that these good times may not last.
Samsung itself downplayed these impressive results for the first quarter of 2018 – my colleague Brian Heater pointed out that the words "slowdown in growth" appeared seven times in the Samsung announcement at the time – due concerns about the company's screen sector and a slowing growth in the general smartphone industry.
As we know, analyst reports show that people buy fewer phones for a variety of reasons. This is one of the explanations of Apple's multi-device approach that pushes its high-end model well beyond the $ 1,000 mark. Slowing growth implies the need to leverage more revenue from the most loyal users in order to increase the overall average selling price.
Samsung has long played in the midfield – where it faces the fierce competition of Xiaomi, Oppo, Huawei and others from China, but it will be interesting to see if it changes its high-end approach.
We'll know more when the company releases its full report on the first quarter results later this month, so stay tuned.
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