Daily Management Review

Samsung warns about profits below forecasts


South Korean Samsung Electronics Co. shares declined on Tuesday after the company issued a profit warning before trading, reports The Wall Street Journal.

The technology giant said its Q1 results would be worse than expected due to weaker sales of displays and memory chips.

Signals of weak sales, especially memory chips, have been received before. Nevertheless, it is important for Samsung, because, despite the fact that the company is the world's largest Smartphone maker, 79% of its operating profit in 2018 was provided by electronic components.

Samsung shares at the end of trading on Tuesday fell by 0.55% after falling 2.3% on Monday. Nevertheless, since the beginning of the year, the company's shares have added 17%.

Shares of the South Korean manufacturer of memory chips SK Hynix finished trading on Tuesday, a decline of 0.27%.

Trade tensions between the United States and China and concerns about a slowdown in China’s economic growth have shaken investor confidence in some key industry players.

According to Manish Nigam, head of technology research in the Asia-Pacific region at Credit Suisse, investors should continue to focus on supply issues in the sector, since Samsung, SK Hynix and American chipmaker Micron Technology signal a reduction in capital expenditures.

“Based on the current management of all three major chip manufacturers [on capital expenditures], the basic supply growth will not exceed 15%,” warns Nigam. “The growth in demand, even with a rather bearish scenario, is likely to be much stronger.”

source: bloomberg.com, cnbc.com