Samsung has negatively revised its forecast for its final quarter of 2018, bringing its forecast revenues to $ 52.2 billion, 11 percent less than it originally estimated. For earnings, forecasts are even more pessimistic: $ 9.6 billion, a decrease of around 29 percent compared to the same period last year. Samsung is the second major smartphone maker to revise its forecasts after Apple, which surprised investors and observers last week by announcing a marked reduction in revenues, largely due to lower-than-expected sales of its new iPhone XS and XR. The entire smartphone industry is experiencing a slowdown, with emerging companies especially from China competing closely with established manufacturers, just like Samsung and Apple.
It is quite rare for Samsung to release information and guidelines on how to read its financial results before they are actually published. Usually the company waits for the final results to be available, in order to offer a more complete and articulated view of its business. The choice arose from the need to prepare investors and markets, given the sharp reduction in financial results. Apple has more or less followed the same logic, anticipating missing forecasts for its closing quarter.
Samsung attributed the decline in revenues to reduced demand for memory, one of its most profitable sectors, and to the “intensification” of competition in the smartphone sector. In the case of memory, the decline was largely due to fewer requests from large data centers to which the company usually supplies the instrumentation for the servers. The reduction was unexpected and marked, leading to lower revenues.
As far as smartphones are concerned, the speech is a bit more complex. On the one hand, Samsung has had to spend a lot more money on marketing and advertising, to try to sustain sales, on the other hand, it has had to deal with more competition from companies like Xiaomi and Huawei, which sell quality products, but at very competitive prices, giving up having high margins on sales.
Samsung does not expect significant improvements in the first months of 2019, but is confident in an increase in sales starting from the second half of the year. The company plans a relaunch in the smartphone sector thanks to the introduction of some new models, compatible with 5G networks that are starting to appear around the world or with long-awaited features, such as screens that can be folded on themselves. .
In general, Samsung's financial situation is more complex than Apple's, and comparisons require some extra caution. It will be necessary to wait for the final results of the last quarter of 2018 to understand how much the reduction in smartphone sales has affected the results, and how much it was due to the lower demand for memories, another very important sector for Samsung.
