Big Drop in Samsung Profits of Q4 2018

With the Samsung Galaxy S10 series became the talk of the town, the South Korean Giant is in some other dimension. After the Apple Inc. dropped the bomb of disappointing results in its sales, the South Korean Giant, Samsung also issued the earning guidance for the final quarter of the year 2018 and that is quite a bad news.

Drop in Samsung Profits of Q4 2018

Big Drop in Samsung Profits of Q4 2018

The earnings not only marks itself as the first quarterly profit decline in two years, but it also showed that the earnings fall far below the analysts’ expectations. The company claims that this drop in the sales and profits is due to its memory chip that was lower in demand than expected. To your information, it is the same memory chip that in previous quarters of the year, helped the company to bolster its earnings even when the smartphone business was in crisis.

Later the reports buzzing around, the Samsung Company, officially released the numbers that interestingly highlights how much loss they had to face in the last year. According to the report, it was said that they expected a consolidated operating profit of about 10.8 trillion won ($9.67 billion), a 28.7 percent drop from the 15.15 trillion won it recorded in the same period a year ago, and below the 13.2 trillion won that analysts polled by Thomson Reuters had predicted. Consolidated sales are expected to be about 59 trillion won, a 10.6 percent decrease from 65.98 trillion won a year ago ($52.9 billion). Analysts had estimated sales of 62.8 trillion won.

In the same statement, the company said, “We expect earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business”.

Talking about the unexpected drop in Samsung profits, not to mention that Samsung’s rival – Apple itself issued a report declaring a drop in the earnings. The CEO of the Apple, Inc. said that they expected the turnover to be $93 billion that dropped to $89 billion to ultimately $84 billion. The company blamed that loss on the sluggish demand in emerging markets, but in general, the smartphone market has been underwhelming for the past two years.

In addition to the top two Smartphone makers, another Android seller company, LG also declared a massive drop in the revenue that we assume is also due to the lower smartphone sales in the year of 2018. But to the fact, LG didn’t mention any kind of reason for its drop in profits. The analysts from LG also pointed out that the company had faced the smaller profit margins for its big screen TVs as well, along with the smartphones.

So what do you think is causing such massive drop in profits in smartphone markets? Do you think it is their high end phones or the inability of the users to upgrade their phones? Let us know your views in the comments section below J

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