Samsung Electronics Co warned of slowing demand and economic turbulence after its quarterly earnings missed analysts’ estimates, joining Apple Inc in foretelling a downbeat year for the technology sector.
The South Korean conglomerate — the quarterly profit of which fell short of expectations by almost 40 percent — said the deteriorating global economy was eroding demand for computers and smartphones and depressing component prices.
Samsung plans to invest in new screen and semiconductor technologies such as foldable displays to try and boost profit, executives said on a conference call.
Photo: AFP
Samsung’s warning came days after Apple — its biggest customer according to data compiled by Bloomberg — predicted its first sales decline in 10 years.
The cautionary tones adopted by Apple and Samsung sent ripples through an industry the fortunes of which are entwined with the market’s two leading players.
Net income excluding minority interests fell 39 percent to 3.24 trillion won (US$2.69 billion) in the fourth quarter of last year, Samsung reported, falling short of the 5.4 trillion-won average of estimates compiled by Bloomberg.
That result includes a 2.5 trillion won non-operating loss due to impairment charges, the impact of a stronger won and anemic growth in its key smartphone and chip units.
The firm said it would buy back 2.99 trillion won of stock in the second phase of its buyback program.
Global smartphone shipments rose just 6 percent in the final quarter of last year — the slowest pace of growth on record, research firm Strategy Analytics said.
Samsung said that in the fourth quarter of last year it shipped 97 million handsets — including low-end feature phones — and 9 million tablets.
Samsung’s smartphone shipments last year grew at just 0.8 percent due to tougher competition from Apple in the high-end segment and China’s Xiaomi Corp (小米) and Huawei Technologies Co (華為) in the budget category, Strategy Analytics said.
“The smartphone market would remain difficult throughout this year, but we still see growth in the lower-end segment, although competition will be tougher,” Samsung mobile communications vice president Lee Kyeong-tae said on the call. “We will continue to add more follow-up models of the A and J series this year to strengthen our competitiveness in the lower-end space.”
Samsung is set to introduce two new versions of its top-tier Galaxy S models at the Mobile World Congress in Barcelona next month, according to people with knowledge of the matter.
The S7 phone is to have a 5.1-inch front screen and the S7 Edge is to have a 5.5-inch screen stretching down the sides, one of the people said.
Cost controls helped enhance the firm’s margins even as mobile division sales fell. Operating profit at the unit last year rose 14 percent to 2.23 trillion won from 1.96 trillion won in 2014.
Operating income at the firm’s chip unit rose just 3.7 percent to 2.8 trillion won. Prices for DDR3 4-gigabit DRAM chips averaged IS$1.93 in the final quarter of last year, compared with US$3.77 in the same period the previous year, according to data from inSpectrum Inc.
Samsung this month said that its foundry business received orders from Qualcomm Inc to make Snapdragon 820 application processor chips.
The firm has decided to use Qualcomm’s chips for about half of its upcoming S7 devices only one year after turning away from the US company, people with knowledge of the matter said.
Operating income from displays fell 36 percent to 300 billion won while profit at the consumer electronics division, which comprises TVs and home appliances, rose more than fourfold to 820 billion won in the quarter, benefiting from falling panel prices and strong US holiday-quarter demand for 4K televisions.
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