Today was supposed to be Samsung’s day to shine as part of CES 2019, with the South Korea-based tech giant offering up a slew of announcements and product unveilings. Even so, the company still had some bad news to share — news that definitely got overshadowed by the rest of what was on the docket for today. We’re talking about the company’s lowering of its fourth quarter earnings guidance today ahead of reporting results for the quarter later this month.
This would represent Samsung’s first quarterly operating loss in two years, thanks in part to an economic slowdown in China that’s drying up interest in Samsung’s handsets there. Samsung also blamed its lowered guidance on falling demand related to its memory chip business — which means, worryingly, the company is getting hit on multiple fronts simultaneously.
Samsung today predicted that its quarterly profit for the three-month period ending in December will be about 10.8 trillion Korean won, the equivalent of $9.67 billion. That’s a 38.5 percent drop from the prior quarter.
That’s also not the worst of it. According to multiple news reports today, analysts are expecting Samsung’s profit to keep slipping throughout 2019 — again, thanks to the China slowdown. Speaking of pointing the finger at China, that also calls to mind the similar news out of Apple less than a week ago, when the iPhone maker lowered its own revenue guidance for the typically busy holiday quarter.
Apple is now forecasting quarterly revenue to come in at $84 billion, a bit lower than what the company projected during its last earnings report. As for the reason behind the lowered guidance, Apple CEO Tim Cook blamed weak iPhone sales on extremely poor performance in China. “While we anticipated some challenges in key emerging markets,” reads a letter from Cook to investors, “we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
As we’ve noted on multiple occasions, Samsung’s handset business has certainly been struggling for a while now. It’s been squeezed by Apple on the top end and by lower-cost Android and in particular Chinese competitors like Huawei on the lower end. Speaking of Huawei, it’s aggressively trying to displace Samsung as the top global smartphone maker, perhaps as soon as this year. However, Samsung has a number of new handsets teed up for this year, such as a foldable device as well as the Galaxy S10, so perhaps that can tilt the needle back in the company’ favor.
