Samsung expects 14% drop in revenue and 60% dip in profit

Samsung expects 14% drop in revenue and 60% dip in profit

Samsung expects 14% drop in revenue and 60% dip in profit

Samsung Electronics has post a whopping 60% year-on-year drop in Q1 operating profit, following an unprecedented investor warning last week.

CLSA's Rana predicted a "slight" rebound in the April to June period, saying: "This quarter is the bottom in terms of earnings". Samsung Electronics will be releasing final and detailed statements later this month.

Samsung said it received fewer orders from cloud service providers, such as Amazon, as well as from handset makers, such as Apple, which has recently seen a slowdown of its own smartphone sales. Samsung saw record sales and profits previous year, but falling global demand for memory chips on weakening demand from China and data center companies like Amazon and Microsoft has hurt its profits.

The introduction of the Galaxy S10 5G is a key milestone in Samsung's research and development that also includes key breakthroughs like the world's first gigabit speed 5G transmission, the first 5G handover between multiple cells, and now, its first 5G smartphone available on the market. In it, Samsung said it "expects the scope of price declines in main memory chip products to be larger than expected".

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Global ratings agency Fitch said the impact on Samsung from the downturn is likely to be smaller than for global peers because of its investments in advanced DRAM production capacity, which gives the company cost advantages during periods of weak margins. They cautiously predict demand will recover around the end of the year. Chip prices have also fallen sharply, further hurting Samsung's profits. Samsung has been struggling to stem a decline in its smartphone business as consumers wait longer to upgrade their devices.

But its latest phones are expensive to make, weighing on profitability even as its sells faster than its predecessor, analysts say.

LG claims its Dual Screen device is the ideal accessory for a 5G phone, better letting you take advantage of augmented reality and enjoying the high-resolution video you'll be able to stream. "We have been stepping up efforts to win equipment contracts in India, Japan, Europe".

Samsung shares slipped about 0.43 percent in morning trade, trailing behind the Korean benchmark Kospi, which was in positive territory.

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