Samsung Electronics’ 4Q profit sinks 40 percent

Slowing global demand for smartphones and memory chips dealt a blow to Samsung Electronics as it reported Thursday a 40 per cent on-year drop in fourth-quarter net profit.

The world’s No. 1 maker of smart-phones and memory chips said its October-December operating profit was 6.1 trillion won ($5.05 billion), matching its earlier guidance. A survey of analysts by financial data provider FactSet forecast net profit of 5.1 trillion won. Operating profits increased 5.55 per cent to 26.4 trillion won.

Sales in Samsung’s key mobile division fell 10 per cent in the quarter to 24 trillion won.

The main reason for the decline in profits was lackluster sales of semiconductors, which buttressed Samsung’s earnings over the past year.

Samsung plans to invest in new screen and semiconductor technologies such as foldable displays to try and boost profit, executives said on a conference call.

So it should come as no surprise that Apple was the world’s second largest chip buyer previous year, spending over US$29 billion, up by 7.1 percent compared to 2014, according to a study released by Gartner on Wednesday.

Facing global economic headwinds, including a sharp fall in oil prices, the company’s fourth quarter earnings fell QoQ, as the components side of the business was impacted by weakened prices for DRAM chips and LCD panels due to overall softer demand in the IT market and PCs.

T-Mobile’s new promo is targeted at families and businesses that would normally just upgrade one person’s phone and then hand that old phone down to another person.

Samsung shares have fallen almost 20% since last March when its latest flagship Galaxy S6 smartphone was launched, as investors have sold off on worries about bleak growth prospects.

Samsung’s IT and mobile reported an operating profit of 2.4 trillion won in the July-September period, slightly lower than the previous quarter’s 2.7 trillion won.

Earlier this month, Samsung partnered with Singapore’s largest telecommunications provider, Singtel, and its NCS subsidiary to collaborate on designing, building, and launching smart home solutions.

“The overall smartphone market will remain hard throughout this year but we still see growth in the lower-end segment, although competition will be tougher”, said Lee Kyung-tae, vice president of the mobile communications business.

The South Korean firm is expecting single-percentage growth for its phones and tablets over the next 12 months, and is pinning much of its hope on the mid-range Galaxy A line. The company’s operating profit was 349 billion won ($301.38 million), which is also up from a year ago, by 27%.

On Thursday, it said will buy back 2.99 trillion won of stock in the second phase of its buyback program.