Samsung announces better-than-expected Q1 2020 earnings guidance
Strong memory chip sales are likely to creditBy Shawn Knight
Why it matters: Samsung on Tuesday provided earnings guidance for the first quarter of 2020, pushing share values north thanks to better-than-expected results - especially for being in the middle of a global pandemic. The next quarter and beyond still remains uncertain and will depend on how the Covid-19 situation plays out.
Samsung forecasted an operating profit of approximately 6.4 trillion Korean won ($5.2 billion) for the March quarter. Consolidated sales, meanwhile, checked in at 55 trillion Korean won ($45.3 billion). The company didn't provide a breakdown of divisional performance - those figures will come later this month when Samsung announces its definitive earnings report.
Shares in Samsung are trading up nearly two percent on the day.
Some may be surprised by Samsung's strong performance given the ongoing Covid-19 outbreak and the fact that it has created a downturn in the smartphone industry. As Reuters correctly highlights, however, the new normal has also sent many white-collar workers and students home to work and study, boosting demand for video conferencing applications, entertainment platforms and more.
The data centers used to manage these networks are seeing surges in traffic, forcing administrators to beef up infrastructure to keep up with demand. Samsung, it just so happens, is a key supplier of memory chips that are being used to help fortify the Internet's underlying infrastructure.
A weak local currency and diminished marketing costs likely also helped Samsung in the quarter.
Samsung is expected to publish its Q1 earnings report on April 23.
Masthead credit: Valeriya Zankovych