Samsungs upcoming Q1 earnings are going to be ugly

Its that time again folks, Samsung has reported guidance for its upcoming Q1 quarter and things dont look good.
Samsung is forecasting that revenue for the quarter will reach 51-53 trillion KRW ($44.87-$46.63 billion), which would represent a drop of around 15 percent on one year previous. The Korean tech giant reported a record operating profit in Q1 2018 $13.76 billion but this time around that is forecast to fall by a whopping 60 percent for the current quarter of business. According to Bloomberg, that would be the companys worst slump for four years.
Following a record year is never going to be easy, but the forecast Q1 2019 operating profit of 6.1-6.3 billion KRW around $5.5 billion represents a pretty steep 43 percent drop on the previous quarter. Thatll give Samsung shareholders plenty to worry about.
The companys pre-earnings guidance doesnt go into details on the predictions, but last years record profits were largely down to the success of its consumer handset business and also a strong market for memory chips. There have been plenty of warning signs that those good times might not last.
Samsung itself played down those impressive Q1 2018 results multiple warnings on the future my colleague Brian Heater pointed out that the words slowing growth appeared seven times in Samsungs announcement at the time due to concerns around the companys display panel business and a slowing growth within the general smartphone industry.
As we well know, analyst reports show that people are buying fewer phones for a range of reasons. Thats one explanation for Apples multi-device approach which pushes its top-of-the-range model to well beyond the $1,000-mark. Slowing growth means a need to extract more revenue from the most loyal users, to thus increase the overall average selling price (ASP).
Samsung has long played in the mid-tiers where it is up against tough competition from the likes of Xiaomi, Oppo, Huawei and others from China but itll be interesting to see if it shifts its top-end approach.
Well know more when the company releases its full Q1 earnings report later this month so stayed tuned.
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