It looks like Samsung’s investors have some bad news ahead, as the company has published its first ever earnings warning.
It’s usually around this time of year that the company publishes earnings guidance for investors to have an idea of what to expect from the full report. This time, they’ve got a warning ahead of the guidance, and it suggests things won’t be pretty.
Shareholders were informed that weak demand for memory would be a serious drag on earnings, stating that “the company expects the scope of price declines in main memory chip products to be larger than expected.”
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Additionally, Samsung may well feel the impact of Apple selling fewer iPhones. As Samsung supplies the OLED panels for the more recent iPhones, its fortunes are confusingly tied to the success of its arch rivals.
How big an impact will this be? We won’t know for sure until Samsung publishes its earning reports in full, but as Reuters points out, the Refinitiv SmartEstimate forecast doesn’t look encouraging. The financial analyst firm reckons that Samsung is set to post a 7.2 trillion won ($6.4 billion) operating profit for the January to March period, which looks good until you realise it posted a 15.6 trillion won profit this time last year. It adds that sales look set to fall to 53.7 trillion won, down from 60.6 trillion won a year ago.
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Samsung told its shareholders at the AGM last week that memory sales should revive in the second half of the year, which should hopefully spell better news later on. Its investors don’t seem to be too spooked yet, with shares dropping just 0.2% in the immediate aftermath of the warning.
How worrying is this for Samsung? Let us know what you think on Twitter: @TrustedReviews.