SEOUL Tech giant Samsung Electronics Co Ltd said on Friday its fourth-quarter operating profit likely rose 15 percent from a year earlier, missing expectations and fuelling concerns the tech industry may be in for a tough year of slack gadget sales.
Slowing economic growth in China and weaker emerging market currencies are undercutting sales of consumer electronics and gadget components, spelling trouble not only for smartphone market leaders Samsung and Apple Inc but for their suppliers and the broader industry.
Samsung said in a regulatory filing its October-December operating profit would likely be 6.1 trillion won ($5.10 billion), compared with a 6.6 trillion won Thomson Reuters SmartEstimate derived from a survey of 30 analysts. Revenue likely rose 0.5 percent to 53 trillion won, the firm said, without elaborating.
"Semiconductor earnings were weak and the smartphone industry entered a phase of low growth," KTB Investment analyst Jin Sung-hye said.
Even so, Samsung shares were up 1.8 percent as of 0124 GMT, outperforming a 0.1 percent rise for the broader market.
"I think Samsung did well considering the weaker tech demand," Jin said.
Shares of the world's No.1 maker of memory chips and smartphones touched a three-month low on Thursday as investors braced for downside risks, with some brokerages having tipped profit to have fallen as low as 6 trillion won.
The guidance was not a major surprise as Samsung Chief Executive Kwon Oh-hyun had warned on Monday that the maker of Galaxy smartphones faced a challenging time ahead due to weak global economic growth.
The tech sector was further rattled on Wednesday when Apple shares fell below $100 for the first time in nearly five months on reports of slowing iPhone 6S and 6S Plus shipments for the January-March quarter.
Shares in major component makers were also battered. Investors bailed out of Apple suppliers Cirrus Logic Inc and Qorvo Inc on Thursday after they cut their revenue estimates for the third quarter.
LG Display Co Ltd, the world's top liquid crystal display maker, also warned of tough conditions for the January-March quarter and said the panel industry faced oversupply problems.
"Currently there's no visible sign of demand recovery," said Avril Wu, research director at market analysis firm DRAMeXchange.
Chinese firm Huawei Technologies Co meanwhile said its 2015 smartphone shipments defied the slowdown and jumped 44 percent, underscoring the tough competitive environment for market leaders Samsung and Apple.
($1 = 1,196.5400 won)
(Additional reporting by Yeonsoo Kwak and Joyce Lee; Editing by Stephen Coates)
Trending On Reuters
Verizon Communications Inc said it had agreed to buy Yahoo Inc's core internet business for $4.83 billion in cash, ending a lengthy sale process for the fading Web pioneer. Full Article