Samsung’s profit and sales will miss estimates, the company warns

Shortly after Apple CEO Tim Cook warned employees and investors that the company’s next quarterly financial results won’t be rosy, Samsung followed suit with a similar warning of its own. 

The company’s operating income in the fourth quarter of 2018 was 10.8 trillion won ($9.6 billion), a far cry from the 13.8 trillion won ($12.3 billion) analysts Bloomberg has polled had estimated. Revenue was 59 trillion won ($52.3 billion), significantly below analysts’ estimates of 63.6 trillion won ($56.6 billion). 

One reason for these results is lower demand for memory chips, due to worsening relations between U.S. and China as well as poor sales of Apple’s iPhone, which uses Samsung chips. According to CNBC, Samsung’s smartphone division also struggled to achieve profitability. 

The company warned that Q1 2019 earnings won’t be stellar, either, though its memory business should improve in the second half of the year. 

Samsung has a few things to look forward to, though: Next year, the company should finally launch its first foldable phone, which might (operating word: might) stir things up a little. More importantly, Samsung is about to launch its first 5G phones next year, which, together with carrier adoption, should be an additional incentive for customers to buy a new Samsung phone. 

With two of the world’s top three smartphone manufacturers struggling, it appears that the smartphone market has matured to the point where pretty much everyone has a phone, with less and less people feeling the need to upgrade on a one or two year cycle. Ever-increasing flagship prices might have something to do with Samsung and Apple’s poor results, too. We’ll see if these companies change something in their strategy this year.