Samsung’s Earnings Hot Streak Continues

Samsung’s Earnings Hot Streak Continues

SEOUL—

Samsung Electronics
Co.

reported its fourth consecutive quarter of record operating profits, capitalizing on excessive demand for its reminiscence chips.

But buyers are centered on how for much longer Samsung, the world’s largest smartphone maker, can keep this tempo. Memory chip costs aren’t more likely to surge as a lot as they did over the previous 12 months, and high-end handset gross sales could possibly be underwhelming as shoppers improve their gadgets much less regularly.

The Suwon, South Korea-based firm mentioned its first-quarter internet revenue rose 52% to 11.69 trillion South Korean received ($10.eight billion) from 7.68 trillion received a 12 months earlier. Samsung’s income elevated to 60.56 trillion received from 50.55 trillion received. Operating revenue grew to 15.64 trillion received, up 58% from 9.9 trillion a 12 months earlier.

Analysts polled by S&P Global Market Intelligence had anticipated the corporate to put up a internet revenue of about 11 trillion received and income of 60.2 trillion for the quarter.

The firm’s first-quarter working earnings reached an all-time excessive. But its internet revenue, which incorporates bills and different prices, was eclipsed by the 12.26 trillion received reported for the ultimate three months of 2017. Samsung has been spending aggressively to spice up gross sales for its newest iteration of its flagship system, the Galaxy S9.

The firm’s reminiscence chip gross sales are in excessive demand from producers of internet-connected gadgets and knowledge servers.

While Samsung mentioned it expects the reminiscence enterprise to stay robust subsequent quarter, the corporate acknowledged that driving earnings in different divisions “will be a challenge” as a consequence of a weaker marketplace for versatile shows and more durable competitors amongst high-end cellphone makers.

Samsung’s shares have fallen about 12% since reaching a peak in early November. This has been pushed by issues that reminiscence chip costs, although nonetheless close to historic highs, will fall this 12 months as opponents ramp up manufacturing.

In the primary quarter, Samsung’s outcomes had been boosted by an earlier launch of the Galaxy S9 system; preliminary gross sales kicked off in March. Last 12 months’s model made its debut in April. These new premium telephones, which might value near $1,00zero, ship the majority of system earnings to Samsung and

Apple
Inc.

But the Galaxy S9’s sizzling begin may fade. In a latest analysis observe, Susquehanna analyst Mehdi Hosseini mentioned Samsung scaled again Galaxy S9 manufacturing from an preliminary goal of 40 million gadgets to a spread of 32 million to 34 million.

Four days later, after Samsung launched preliminary earnings steerage for the primary quarter, Mr. Hosseini mentioned he noticed “limited upside” for Samsung throughout the remainder of 2018 as a consequence of weaker smartphone gross sales and a stronger Korean foreign money.

Lower shipments would additional stress cellphone earnings as a result of Samsung priced the Galaxy S9, and the bigger Galaxy S9+, equally to final 12 months’s mannequin, regardless of increased uncooked materials prices.

On the parts facet, Samsung gross sales of versatile shows had been damage by weaker-than-expected demand for Apple’s iPhone X. For that iPhone mannequin, Samsung was the one important maker of natural light-emitting diode, or OLED, shows.

The Wall Street Journal reported final week potential OLED rival,

LG Display
Co.

, had encountered manufacturing issues, inflicting it to fall behind the schedule many suppliers observe to start mass manufacturing for brand spanking new iPhone fashions.

That might additional prolong a profitable enterprise for Samsung, promoting the cellphone shows that value about $100 per iPhone, in keeping with business analysts.

Write to Timothy W. Martin at [email protected]

Appeared within the April 26, 2018, print version as ‘Samsung Gets Lift From Chips.’

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