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Samsung Electronics' profits take a nosedive

Credit: Reuters Studio
Published on April 30, 2019 - Duration: 02:02s

Samsung Electronics' profits take a nosedive

South Korea's Samsung Electronics posted its weakest profit in more than two years in the first quarter of 2019, but remains optimistic about second-half results.

Michelle Hennessy reports.

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Samsung Electronics' profits take a nosedive

Samsung Electronics is suffering its worst profit results in more than two years.

The numbers aren't kind.

The South Korean tech giant reported a 64 percent drop in its chips business for the first quarter; a 40 percent drop in its mobile business; and logged around 480 million U.S. dollars in losses for its display unit.

And it warned: there's more pain to come in Q-2.

Reuters Breakingviews columnist Jeffrey Goldfarb has been studying the report: (Soundbite) (English) ASIA EDITOR REUTERS BREAKINGVIEWS, JEFFREY GOLDFARB, SAYING: "They use the word 'slow' or 'weak' or some derivation thereof 19 times which signals that you know that it was a pretty rough quarter and you know to my mind also suggests that it might take a little bit longer to come out of the problems that they're having and that the whole market is having.

The semiconductor market which they operate has been experiencing a glut of supply and the whole industry has been trying to work through that what that has done is push prices down quite a lot." The company is feeling more positive about second-half results.

It predicts demand for memory chips and high-density products will rebound later in 2019.

Shareholders are also appearing cautiously optimistic.

Despite indefinitely postponing the release of its new folding phone, and weak profits for the first quarter - Samsung's stock price has actually increased by more than a fifth this year.

(Soundbite) (English) ASIA EDITOR REUTERS BREAKINGVIEWS, JEFFREY GOLDFARB, SAYING: "Samsung is sort of a proxy for a lot of things.

It's a proxy for the chip market, for the smartphone market which is therefore you know a proxy for the economy really and it's a 260 billion dollar company and I think people, investors have factored in what they believe, I guess they're not being pessimistic enough to my mind about where the whole industry is going and mainly to do with the speed of how much everything comes back.

Very cyclical industry but you know investors seem to be expecting quite a big turnaround."

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