Samsung profit is halved, company guidance warns

Samsung, the world’s largest smartphone and memory chip maker, warned the market its quarterly profit would drop by 56%, prior to the official result announcement later this month.

Wei Shi

July 5, 2019

2 Min Read
Samsung profit is halved, company guidance warns

Samsung, the world’s largest smartphone and memory chip maker, warned the market its quarterly profit would drop by 56%, prior to the official result announcement later this month.

Samsung Electronics told the market that the operating profit generated in the quarter ending 30 June amounted to KRW 6.5 trillion ($5.55 billion), which would be a 4% sequential improvement on Q1 this year, but would represent a 56% drop from the same quarter a year ago. The total revenue is expected to be around KRW 56 trillion ($47.8 billion), a 7% sequential growth, but 4% year-on-year decline. The continued depressed profitability (operating margin almost unchanged from last quarter at 12%, compared with 25% a year ago) indicates Samsung’s main business has not turned the corner.

The semiconductor sector, where Samsung has generated the highest profit among all of its business units, remains weak. Last month investment analysts from the private fund Evercore reported that the inventory of memory chips by downstream device makers continued to be at excessively high level, therefore the investors did not see the sector recover before 2020.

The IT & Mobile communication unit, which has generated the highest revenue for Samsung, is still in trouble. Samsung has braced intensive competition particularly from the Chinese competitors, and its Galaxy S10 series have not been able to turn its fortune. The troubled launch of the Fold version of S10, which had been slated for Q2, has still yet to happen. A new Unpacked event has just been announced for August, but is likely to unveil its new tablet, the Galaxy Note 10, to consider the stylus featured on the event invitation.

When faced with pressure on profit, companies often turn to control cost. That looks to be what Samsung has been doing. A few days ago The Economic Times of India reported that Samsung will cut 1,000 jobs from the company’s smartphone functions. This is after 150 jobs are already gone in Samsung’s telecom infrastructure team.

About the Author

Wei Shi

Wei leads the Telecoms.com Intelligence function. His responsibilities include managing and producing premium content for Telecoms.com Intelligence, undertaking special projects, and supporting internal and external partners. Wei’s research and writing have followed the heartbeat of the telecoms industry. His recent long form publications cover topics ranging from 5G and beyond, edge computing, and digital transformation, to artificial intelligence, telco cloud, and 5G devices. Wei also regularly contributes to the Telecoms.com news site and other group titles when he puts on his technology journalist hat. Wei has two decades’ experience in the telecoms ecosystem in Asia and Europe, both on the corporate side and on the professional service side. His former employers include Nokia and Strategy Analytics. Wei is a graduate of The London School of Economics. He speaks English, French, and Chinese, and has a working knowledge of Finnish and German. He is based in Telecom.com’s London office.

test new title

See more
Subscribe and receive the latest news from the industry.
Join 56,000+ members. Yes it's completely free.

You May Also Like