Samsung confirms terrible earnings for the holiday quarter, and it will only get worse
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.
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."
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."
Comments
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.
Hmm, I do think it’s stage, but you could be right.
Speechless, just Speechless.
Samsung isn’t bigger than Apple. They USED to be, but not anymore (revenue wise). They sure do have a lot more products, though.
http://m.koreatimes.co.kr/pages/main.asp
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.
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.
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.