Samsung Raises Earnings Estimates

Samsung Raises Earnings Estimates

almost 4 years ago2 mins

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The sums sang for Samsung as it began to add up last quarter’s earnings on Tuesday: in spite of the coronavirus cramping other companies’ style, the Korean tech giant actually raised its expectations 🤯

What does this mean?

When its financial results for the first three months of 2020 are finalized in two weeks’ time, Samsung predicts revenue will come in 5% higher than a year ago, with profit up 2.7%. The pandemic likely dented sales of the company’s TVs and smartphones – but more people working and shopping from home meant more demand from data centers for Samsung’s highly profitable computer memory chips.

Samsung is one of the world’s largest chipmakers
Samsung is one of the world’s largest chipmakers

Samsung also sells semiconductors (and screen components) to rival smartphone makers. But while the company’s strategic decision to reduce its Chinese production and sales has shielded it from the effects of coronavirus lockdown there, the same can’t be said of Apple 😬

The Californian firm, whose business continues to rely heavily on iPhone sales, warned investors last month that its own first-quarter earnings would come in below expectations as a result. And while Chinese manufacturing is now picking back up, production of new iPhones this year – including Apple’s first 5G model – may be just half what Apple had hoped.

Samsung remains the world’s leading smartphone seller (Source: Statista)
Samsung remains the world’s leading smartphone seller (Source: Statista)

Why should I care?

Impressed investors sent Samsung’s London-listed shares up 5% on Tuesday. After a rocky period for semiconductors, higher demand looks set to translate into higher prices going forward 🤑

In the coming weeks, other tech firms will also lift the lid on how coronavirus has affected their financials – and for once, the world’s biggest companies may see their fortunes diverge. While the likes of Microsoft and Amazon should benefit from increased cloud computing and ecommerce, Apple – with its less-developed “services” segment – may well have weak Chinese demand to blame once again for a rotten set of earnings...

Apple's stock price has struggled in 2020
Apple's stock price has struggled in 2020

Be sure to check out our Packs on these companies for more on the strengths and weaknesses of their individual business models!

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