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Samsung flags are smartphone profit to fall, happy potato chips

SEOUL (Reuters) – Samsung Electronics has warned of a smaller mobile business profit on Thursday as its rival, Apple gave a positive iPhone sales, outlook, dampening hopes the new models will help the world’s largest smart phone vendor finally got back on the right track.

Investors have pinned their hopes on a recovery in its mobile business, which is now half of Samsung’s earnings, as the chip’s operation will remain in the doldrums due to over-supply and weak global demand.

Strong sales of the samsung Galaxy Note 10 is the smartphone that helped the South Korean company’s report, the best in the mobile business, income in six quarters in the three months that ended in September, as it recovers from a battery explosion caused a scandal at the end of 2016 and that will really hurt sales.

The mobile business posted a 32% rise in operating profit to 2.9 billion won ($2.5 billion) in the third quarter, the highest since the first quarter of 2018.

However Samsung has warned that fourth-quarter mobile revenues were to decrease as well as marketing costs incurred to increase the sales of its flagship models to alleviate post-run spikes.

The downbeat forecast came hours after Apple Inc. said holiday-quarter revenue would beat Wall Street’s expectations, citing a need for services, wearables, and the newest iPhones.

The new smartphone will most likely fizzle out in the fourth quarter, and if people don’t find it on Samsung’s new Note model, which came out a few months ago, it is very attractive,” said Song Myung-sup, analyst at HI Investment & Securities.

“This will result in a decrease of the deliveries, and, eventually, less and less profit.”

Lee, Jong-min, to Samsung’s vice president of mobile communications business, said in a transcript of the cell is in a downward trend.

“Although the mobile market in general, there will be soon a period of time, a strong end of year seasonality, the question is still trending down year-over-year as a result of the continued uncertainty in the global macro environment,” he said.

FILE PHOTO: The logo of Samsung Electronics is seen at its office in Seoul, south korea, south africa, South Korea, July 4, 2017. REUTERS/Kim Hong-Ji)

Samsung is betting on growth in the market for 5G, and foldable phone this time next year.

Just this week, it unveiled a design for a phone that can be folded into a square, as alluded to in the following, the innovation is in the folding of the segments.

Samsung’s smartphone shipments rose by 8 per cent in the third quarter to 78.2 million as phones grow that Apple’s iPhone sales dropped by 3%, according to Strategy Analytics.

Analysts are saying that Samsung’s smartphone sales were boosted by the U.S. sanctions imposed at Huawei Technologies , which are harmful to the Chinese firm’s mobile business in the global market.

CHIP REPAIR

As opposed to be careful about the mobile industry, Samsung said chip sales should pick up next year, with positive signs of demand from data center customers, and 5G smart phone manufacturers.

The world’s largest memory chipmaker, said September-quarter operating profit fell by 56%, up from 7.8 trillion won ($6.7 billion), slightly above the 7.7 trillion won, an estimate of the company’s previously released. The revenues decreased by 5.3% to reach an annual 62 trillion won, in line with the previous estimates.

In the semiconductor business due to a lot of Samsung’s most important source of income, reported operating profits of 3.1 trillion won, less than a quarter of its record, in the same period of the previous year, in the middle of the oversupply and decreasing global demand for consumer electronics.

Samsung’s profits have slumped-on-year for four consecutive quarters, and is expected to fall again in the current quarter for the repair of the following year, on the back of a stronger chip sales, analysts say.

Global 5G smartphone sales will be in full swing next year, with the support of the permanent of memory-chip demand,” said analyst Park Sung-soon at the Cape Investment & Securities.

FILE PHOTO: The logo of Samsung Electronics is seen at its office in Seoul, south korea, south africa, South Korea, on March 23, 2018. REUTERS/Kim Hong-Ji)

Samsung had warned that its outlook for sales in 2020 is shrouded in uncertainty surrounding the macro-economic environment, it is probably a reference to the future of the U.S.-china trade relations.

Samsung’s shares gained 1.8%, as compared to a 1% rise in the wider market is by 0403 GMT.

Reporting by Ju-min Park and Heekyong Yang; Editing by Miyoung Kim and Stephen Coates

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