Samsung confirms terrible earnings for the holiday quarter, and it will only get worse

Posted:
in General Discussion
Samsung is warning that it expects profits to be down more than Apple's revision, because of the worsening Chinese economy inducing weak memory demand coupled with a bad smartphone market -- and at least the next two quarters are likely going to be impacted as well.

Samsung Galaxy Note9


Profits are estimated to have come in at 10.8 trillion won, or about $9.67 billion, Samsung said. That's below earlier expectations, and results for the past two quarters, though Samsung tends to stagger major product releases throughout the year, instead of favoring the September and December quarters like Apple.

Sales revenue is estimated at about 59 trillion won, or $52.4 billion, down almost 11 percent versus a year ago. Samsung said it was hurt by a drop in memory demand from data center customers and a simultaneous dip in memory prices caused by a lack of consumer and manufacturer demand.

Mark Newman, a managing director at investment firm Sanford C. Bernstein, explained the situation to CNBC.

"That's following about 24 months of very, very aggressive growth," he said. "So, suddenly, what's happened is data center companies such as Amazon, Microsoft, Google...these companies suddenly have enough memory, and they stopped ordering."

Samsung didn't provide much color on the smartphone situation, but may say more when it releases finalized earnings later in January. Analysts have previously commented that the smartphone market is plateauing, and that within that sphere designs are becoming increasingly homogenous, such that people may have no particular loyalty.

The company has also likely been impacted by problems in the Chinese economy. While it controls less than 1 percent of the Chinese smartphone market versus Apple's 9 percent, its memory and processors are used by many smartphone makers.

Samsung's news follows shortly after Apple predicted its own revenue shortfall for the December quarter, with revenue estimated at $84 billion versus prior guidance between $89 billion and $93 billion. CEO Tim Cook primarily blamed Chinese iPhone sales, saying it accounted for "all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline."

The company is now facing potential legal actions, and Cook promised his workforce that management will "learn" and "take action."
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Comments

  • Reply 1 of 28
    MacProMacPro Posts: 18,141member
    And are we still expecting Apple to report the second highest earnings of any quarter in February?  
    netmagemagman1979LukeCagewatto_cobrajony0
  • Reply 2 of 28
    Mike WuertheleMike Wuerthele Posts: 4,339administrator
    MacPro said:
    And are we still expecting Apple to report the second highest earnings of any quarter in February?  
    Yup.
    magman1979SpamSandwichLukeCagewatto_cobra
  • Reply 3 of 28
    MacPro said:
    And are we still expecting Apple to report the second highest earnings of any quarter in February?  
    And did we pay the highest prices for products? Unsustainable, especially in their quest for 'developing' markets.
    jbdragoncommand_f
  • Reply 4 of 28
    jdgazjdgaz Posts: 348member
    The smartphone business used to be a two year cycle as people chased longer battery life and 2G-3G-4G revision. Now with all the added features, decent speed, and decent battery life (near or beyond full day for most) phone life is probably leaning more towards a four year replacement cycle.
    netmagechasmcommand_f
  • Reply 5 of 28
    GHammer said:
    MacPro said:
    And are we still expecting Apple to report the second highest earnings of any quarter in February?  
    And did we pay the highest prices for products? Unsustainable, especially in their quest for 'developing' markets.

    Worth every penny.

    The real idiots are those paying similar prices for something like a Note 9, and then waiting 6 months for the next Android version and getting dropped from future updates after 2 years (or 2 updates). That’s what I call planned obsolescence.
    RonnnieOmagman1979Rayz2016olslordjohnwhorfinracerhomie3chasmkiltedgreenfastasleepmwhite
  • Reply 6 of 28
    brucemcbrucemc Posts: 1,519member
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?
    doctwelvemagman1979olslordjohnwhorfinchasmkiltedgreenwatto_cobrajony0
  • Reply 7 of 28
    brucemc said:
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?
    Because Samsung is not a one trick pony. They will be fine. They are a huge chunk of SK's GDP.
    edited January 8 muthuk_vanalingamcommand_f
  • Reply 8 of 28
    knowitallknowitall Posts: 1,231member
    “Samsung tends to stagger major product releases throughout the year, instead of favoring the September and December quarters like Apple.”

    Hmm, I do think it’s stage, but you could be right.
    watto_cobra
  • Reply 9 of 28
    ksecksec Posts: 1,551member
    iPhone XR not doing well, they start claiming Samsung, Foxconn, and TSMC ALL had great forecast and record months and Apple iPhone are doing fine. Now Apple announced a revision guidance and all of a sudden these same people said Samsung are not doing well as well, and even worst than Apple. 

    Speechless, just Speechless.
    muthuk_vanalingam
  • Reply 10 of 28
    brucemc said:
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?
    Because Samsung is not a one trick pony. They will be fine. They are a huge chunk of SK's GDP.
    LOL not a one trick pony but companies like Netflix and Chipotle that are truly one trick ponies are Wallstreet darlings. I would say your thinking is very limited on what you think a one trick pony is.
    magman1979LukeCageviclauyycradarthekatmwhiteneil andersonwatto_cobrajony0
  • Reply 11 of 28
    brucemc said:
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?

    Samsung isn’t bigger than Apple. They USED to be, but not anymore (revenue wise). They sure do have a lot more products, though.
    magman1979muthuk_vanalingamradarthekatwatto_cobra
  • Reply 12 of 28
    jungmarkjungmark Posts: 6,657member
    Weird. I heard Sammy "innovates" so they should be immune to this!
    magman1979kiltedgreenviclauyycradarthekatwatto_cobra
  • Reply 13 of 28
    That's because Huawei eats Samsung's lunch in China. I wonder how Samsung's bending LCD phone doing? Last time I heard it was stolen by China.
    watto_cobra
  • Reply 14 of 28
    brucemc said:
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?
    It is if you’re Korean

    http://m.koreatimes.co.kr/pages/main.asp
    edited January 8 muthuk_vanalingamcommand_f
  • Reply 15 of 28
    SpamSandwichSpamSandwich Posts: 30,836member
  • Reply 16 of 28
    Rayz2016Rayz2016 Posts: 4,556member
    brucemc said:
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?
    Because Samsung is not a one trick pony. They will be fine. They are a huge chunk of SK's GDP.
    Heh.

    Aren't you precious.

    Yes, Apple is indeed a one-trick pony. The problem is that you don't understand what that 'trick' is.

    Y'see, you think it's the iPhone.

    But it's not. Not anymore. The one-trick is the Apple ecosystem, and as they add services to it, the one trick will get bigger and bigger, accessible by devices given out and replaced by Apple as part of the ecosystem subscription, and other devices, such as TV sets, blessed with access to the same ecosystem.


    dewmeradarthekatcommand_fwatto_cobra
  • Reply 17 of 28
    Rayz2016Rayz2016 Posts: 4,556member

    brucemc said:
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?

    Samsung isn’t bigger than Apple. They USED to be, but not anymore (revenue wise). They sure do have a lot more products, though.
    Things are changing, and so few of the analysts can see it. DED, PED and Horace Dediu have pretty much nailed the whole unit economics thing and how it applies to Apple's new love of services. If every device is a business unit, then you aim to make each device as profitable as possible. Why is it so important to Apple that each device lasts as long as possible? Yes, it's good for consumers, but what does Apple get out of folk keeping the device for longer?

    1/. They stay in the ecosystem for longer.
    2/. The longer the device lasts, then the more profitable it is as an access point for the ecosystem. Especially if, in the future, Apple simply gives you a device (or massively subsidises it)  when you sign up.

    http://www.asymco.com/2019/01/07/apples-unit-economics/

    Fascinating stuff. Apple is cannibalising itself again. The phone was the centre of the Apple universe, now it's being shifted to the side to sit alongside the iPad, the Mac, the TV, the future car … all plugged in to an expanding ecosystem. 

    LukeCageradarthekatwatto_cobra
  • Reply 18 of 28
    chasmchasm Posts: 1,261member
    Because Samsung is not a one trick pony. They will be fine. They are a huge chunk of SK's GDP.
    Neither is Apple. The company grew nine percent this quarter on the strength of wearables (multiple products), services (multiple products), strong Mac and iPad growth, and iPhone sales everywhere except China. You're right that Samsung will be fine (thanks mainly to being a top supplier component to ... Apple), but their mobile division is in the dumpster at present (and hasn't been performing well for a while now).
    LukeCageradarthekatwatto_cobra
  • Reply 19 of 28
    avon b7avon b7 Posts: 3,446member
    Rayz2016 said:

    brucemc said:
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?

    Samsung isn’t bigger than Apple. They USED to be, but not anymore (revenue wise). They sure do have a lot more products, though.
    Things are changing, and so few of the analysts can see it. DED, PED and Horace Dediu have pretty much nailed the whole unit economics thing and how it applies to Apple's new love of services. If every device is a business unit, then you aim to make each device as profitable as possible. Why is it so important to Apple that each device lasts as long as possible? Yes, it's good for consumers, but what does Apple get out of folk keeping the device for longer?

    1/. They stay in the ecosystem for longer.
    2/. The longer the device lasts, then the more profitable it is as an access point for the ecosystem. Especially if, in the future, Apple simply gives you a device (or massively subsidises it)  when you sign up.

    http://www.asymco.com/2019/01/07/apples-unit-economics/

    Fascinating stuff. Apple is cannibalising itself again. The phone was the centre of the Apple universe, now it's being shifted to the side to sit alongside the iPad, the Mac, the TV, the future car … all plugged in to an expanding ecosystem. 

    On pretty much the very same day DED said Apple was doing fine in China, Tim Cook issued revised guidance citing problems - in China - specifically. 

    People that always see a 'narrative' around them are prime candidates not to see their own narratives.

    Apple is re-focussing its business strategy to give it more options going forward

    Aiming to make each device as profitable as possible brings negatives that we have been seeing of late.

    Apple has simply been unable to break out of a situation of four years of flat sales. They still have options but headwinds are making things harder than normal.

    Tim Cook tries to play down the situation (as he should) but when you tie flat sales, missed guidance, iterative iPhone updates and the announcement of an 'all hands' meeting to discuss Apple's 'miscalculation', it is clear that things aren't as rosy in the garden now (nor have the been for at least the last three years) as before.

    muthuk_vanalingam
  • Reply 20 of 28
    brucemc said:
    Strange, but I did not see this information sprayed across the Internet, repeating on every news channel, along with commentary on the supposed DOOM of Samsung.  Samsung Electronics is a bigger company (revenue and product line wise) than Apple, and their drop in earnings is going to be more, so how is this not front page news?
    Because Samsung is not a one trick pony. They will be fine. They are a huge chunk of SK's GDP.
    You maybe right about Samsung is not a one trick pony. But how many tricks do Samsung knows that makes money? It is the semiconductor and cellphone. The others are not much profitable or even losing money. And how well the money makings businesses doing?
    watto_cobra
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