Samsung Electronics Sells Off Samsung Card Stake

The results are finally and officially in, and Samsung has fallen short of expectations, again, with a chip supply glut presaging tough swimming for at least some corners of the tech world, especially as it’s tied to smartphones.

That chip glut is especially problematic as it had been chip sales that had given earnings and cash to the company, enough to offset the continued slide in the mobile business, and enough to generate roughly half the bottom line. That’s not going to happen as the chips are, well, falling where they may, at least in terms of pricing. In an environment where global chip sales are down in the low single digits (and possibly going to head a bit lower), clouds are gathering for the electronics giant.

The quarter’s results bear out at least some level of caution for investors. The company said that its net income for the three months that ended in December had fallen about 40 percent, year over year, to $2.7 billion (3.2 trillion won), and as had been reported in preliminary results, revenues were pretty steady at 53 trillion won. Chip sales were up 24 percent year over year, but operating profit lagged, and seriously, up just 3 percent over the same period, indicating that OPEX is not all that flexible.

With a nod to what the company termed a “difficult business environment” for info tech hardware, Samsung has pledged to do, well, what it can do, which in this case is a push to diversify beyond current business lines, which would include chips with smaller dimensions and bigger firepower.

But it is the mobile phone business where there’s going to be some real give and take in this segment — and competition seems foremost on management’s minds as they said on the conference call that mid to low-end smartphones would see a battle, because that is where the growth is. The intent now is to bring out new iterations of the Galaxy series of phones, especially the A and J models. Foldable displays are still in development and may be arresting enough to help with at least a few battles on the hardware front against Chinese players.

Separately, the company said in an unrelated release that Samsung’s Life Insurance Co will buy the Electronics Co’s 37.5 percent stake in sister firm Samsung Card for roughly $1.3 billion. That would add to the 34.4 percent stake that Samsung Life already holds in the card business. This is not necessarily new news, as Reuters said today, but it does show some shuffling around of business stake ownerships and at least some attempt by the electronics arm to focus more on, well, electronics.