Home / Uncategorized / Samsung disappoints because the iPhone screens are not compatible with the won

Samsung disappoints because the iPhone screens are not compatible with the won

Samsung Electronics Co. failed to reach analysts' earnings estimates at South Korea's emerging currency and year-end bonuses exceeded Apple Inc.'s display orders for the new iPhone X.

Operating income was 15.1 trillion won ($ 14.2 billion) in the three months ending in December, the average of the estimates being lost by 1 trillion won. Shares fell in Seoul after the result.

Samsung is spending more to boost sales of smartphones and other consumer products, as it shares in benefit of Apple's screen orders and buoyant semiconductor prices. That helped boost year-round profits to a record high and triggered bonus payments to workers. The increase of 7 percent of the won against the dollar in the last quarter to a maximum of three years is creating headwinds for the largest company in South Korea

"The impact of the currency is inevitable," said Sanjeev Rana , CLSA technology analyst in Korea. "It can not be compensated unless we have price increases, but we understand that the contracts with Apple are pretty fixed in terms of prices, it's the manufacturer that takes the risk."

Each change of 10 won in the exchange rate affects Samsung's operating profit by approximately 200 billion won quarterly and the impact in the fourth quarter was approximately 600 billion won, Rana estimated.

Samsung shares fell 3.1 percent to 2.52 million won at market close. The stock has fallen 12 percent from a record in November.

Sales in the fourth quarter were 66 trillion won, compared to 67.6 trillion won that analysts expected. Samsung will not provide net income or divide the division's performance until it publishes the final results later this month.

While Samsung has benefited from a rebound in the chips, reference memory prices have stabilized, limiting the growth that drove the Suwon, South Korea-based company, recorded gains in the last two quarters .

Samsung leads in the next generation of screens called organic light-emitting diodes. It provides OLED displays for the iPhone X even when the two companies compete for dominance in the global smartphone market.

The South Korean government this month warned about the increase in the won and said it would take action in the case of unilateral movements in the nation's currency. Factors behind its assessment include the raising of the central bank's interest rate, the tensions in North Korea that show signs of reduction and robust exports.

"The won-dollar exchange rate is worrying," Lee Seung-woo, an analyst at Eugene Investment and Securities, said in a report before the announcement. "First quarter earnings are expected to be 15 trillion won."

Samsung said it planned to introduce its new flagship smartphone, the Galaxy S9, next month, presenting the iPhone X with an expected challenger Samsung is also trying to launch a phone with a flexible screen to help scare away the challenges of Huawei Technologies Co., Oppo and other Chinese rivals.

Source link