Samsung Shares Fall on Disappointing Second Quarter Results

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Samsung Electronics shares were falling on Tuesday after the world’s largest smartphone maker reported second quarter results that did not sit well with Wall Street.

The company reported that second quarter profit dropped 56% due to falling memory chip prices.

Operating profit for the quarter was 6.6 trillion Korean won, or $5.6 billion), which was down 55.61% from the same period a year ago. Consolidated sales for the quarter came in at 56.13 trillion won.

“The weakness and price declines in the memory chip market persisted as effects of inventory adjustments by major datacenter customers in the previous quarters continued, despite a limited recovery in demand,” Samsung stated.

The numbers were however better than the guidance Samsung had provided earlier this month.
Looking ahead, the company said that for the second half of the year, “demand is expected to grow although the
Company sees volatility in the overall industry due to increased external uncertainties.”

“Looking ahead to the second half, Samsung expects persistent uncertainties in the memory business, although demand is seen growing further on strong seasonality and adoption of higher-density products,” the company said.

Samsung also said that in the third quarter, it “will focus on successful launches of new innovative products – the Galaxy Note 10 and Galaxy Fold. It will enhance the 5G smartphone lineup to take the lead in the new market and introduce more competitive A series models in the second half to extend the ongoing positive momentum in mass market smartphone sales.”

“Chip inventories remain high but uncertainty about supply is increasing because of Japan’s export curbs,” remarked Kim Young-woo at SK Securities. “Although a strong demand recovery is unlikely, Nand contract prices could rebound and Dram contract price declines could slow on reduced output and supply-related uncertainty.”

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