In brief: Following a rare disappointing second quarter of 2018, Samsung returned to record profits in Q3 last year. But the final quarter saw the smartphone maker miss analysts’ expectations and brought its first quarterly decline in profits in two years.
In its earnings guidance for Q4 2018, Samsung Electronics said it expected sales to be down roughly 11 percent year-on-year to about 59 trillion won (about $52.5 billion)—analysts were predicting $56.2 billion. Operating profit, meanwhile, dropped 29 percent to about $9.7 billion, whereas it was expected to be $11.8 billion.
“We expect earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business,” Samsung said, in a statement. While its chip business is usually the firm's shining light, it has suffered in the face of weakened demand from data center customers. The US/China trade war has also caused problems.
The company is facing tough times in the stagnating smartphone market, too. Flat sales and competition from other firms' top-end devices meant more was spent on marketing. It’s also dealing with the problem of flagship smartphone owners refusing to buy to newer, more expensive models, the ailing Chinese economy, and feature phone owners not upgrading due to the lack of “ultra-low-cost” smartphones .
The news comes after Tim Cook last week warned that “[Apple] revenue will be lower than our original guidance for the quarter."
Samsung said it expects earnings to be affected by the difficult conditions for memory during the first three months of this year. But it predicts profitability will recover in the second half of 2019 thanks to new phone launches and the sale of new processors.