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Samsung could be heading for a 50 percent profit drop

Engadget 2019-10-08 03:15:00

Samsung's earnings guidance for the third quarter of 2019 shows that things haven't significantly improved for the tech giant over the past months. The Korean conglomerate expects another profit slump for the three-month period that ended in September: in particular, it believes it will post an operating profit of around 7.7 trillion Korean won (US$6.44 billion). That's higher than the 6.6 trillion won (US$5.5 billion) profit Samsung made in the second quarter, but it's also down 56 percent from the same period in 2018 when the company made 17.57 trillion won (US$14.7 billion) in profit.

The tech giant will reveal more details about the state of the company when it releases its full earnings report. As CNBC noted, if Samsung's forecast is correct, then this will be the third consecutive quarter where its operating profit is halved from the same period a year ago. It even published a warning before it released its earnings guidance for the first quarter of 2019 to prepare investors as early as possible.

The company cited plummeting chip prices and slower chip demand that time, which are issues that continue to plague not just Samsung, but also other chipmakers. Samsung's chip business has been its biggest moneymaker in a while, so the lack of demand for memory chips worldwide is hurting the company finances. CLSA Senior Analyst Sanjeev Rana told CNBC, however, that things are improving for the industry, and Samsung actually enjoyed better-than-expected memory shipments in the third quarter.