What's going on?
Samsung Electronics, the tech branch of the massive South Korean conglomerate, forecasted on Tuesday that its profits in the fourth quarter of 2017 would just miss market expectations, despite totaling a record $14 billion.
What does this mean?
Samsung Electronics — the world’s largest manufacturer of smartphones — has had a rough go of it in the past two years: its parent company was implicated in a massive corruption scandal involving the former president of South Korea, German horseback riding and the resignation of several high-level executives. And who could forget the incredible exploding Note 7?
Still, Samsung Electronics has managed to report growing profits in the past year, thanks to booming sales of its memory chips and OLED screens, which are also used by many of its competitors in the smartphone market (including, yes, Apple’s much-vaunted iPhone X). And even though Samsung’s fourth-quarter profits are expected to come in below expectations, they would nonetheless mark a record high for the company.
Why should I care?
The bigger picture: The smartphone market is looking a bit tapped out these days. (tweet this)
Samsung will confirm its forecasts in the near future, and experts are eager to see how they measure up against Apple’s own official earnings report, due out on February 1. Some are predicting that both companies will report a sluggish market for smartphones, and the big names’ bottom lines aren’t expected to get any chunkier with Chinese rivals like Huawei expanding their reach (though not to the US, yet).
For markets: Shareholders may be in for a leaner year.
Samsung shares rose almost 50% last year, although they sold off from November onwards — and 2018 looks like it will be a more challenging year. As well as potentially slowing smartphone sales (Samsung is expected to launch a competitor to the iPhone X in February), prices of the memory chips that helped boost Samsung’s profits throughout the middle of 2017 have leveled off.