Phone Sales Were Solid, But Samsung Suffered A Sluggish Q4

A day after rivals in Cupertino posted revenue and earnings results at an all-time high, the team at Samsung had something less of a victory march when it reported its fourth quarter earnings.  By the numbers, the electronics maker saw its Q4 operating profit drop by 34 percent to 7.16 trillion won ($6 billion). Overall revenue was up 1 percent to 59.88 trillion won ($50.6 billion).  The good news for 2019 was that it was better than 2018, when Samsung saw its operating profit take a 52 percent hit.

Smartphones were not the problem — the firm reported “solid sales of flagship smartphones” during the quarter.  The issues seems to have been its components business — some 41 percent of its revenue last year — which has taken a battering at the hands of falling memory chip prices and tepid demand for display models. All in all, Samsung’s device solutions business — which includes displays and semiconductors — saw its operating profit drop 57 percent while its revenue slid 11 percent.

“Apple is recovering due to cheaper iPhone 11 pricing and healthier demand in Asia and North America,” Strategy Analytics analyst Neil Mawston noted of the contrast between Apple and Samsung’s results.

Samsung’s mobile boost didn’t have enough juice to even out falling component prices, though mobile did perform solidly during the quarter. Samsung’s mobile business saw operating profits up 67 percent to 2.52 trillion won ($2.13 billion), while its revenue increased 7 percent to 24.95 trillion won ($21.1 billion).

The hope for 2020 out of Samsung is for a turn around — though that outcome is far from assured.  Samsung noted in its earnings press release that it “sees continued uncertainties in the global business environment.”

That uncertainty, according to Samsung, could translate to weak smartphone and tablet sales in Q1 of 2020. The company also anticipates flat profits as it begins the rollout of marketing for its new flagship line of foldable smartphones.

That redesign, however, is ultimately expected to be a revenue driver.