Samsung Q2 earnings guidance

[ad_1]

Samsung Electronics Co. 8GB Double-Data-Rate (DDR) 4 memory modules are arranged for a photograph in Seoul, South Korea, on Tuesday, July 9, 2019.

SeongJoon Cho | Bloomberg | Getty Images

Samsung shares wavered Tuesday morning after the tech giant posted earnings guidance for the three months that ended in June. 

Operating profit likely rose almost 23% to 8.1 trillion Korean won (about $6.8 billion) from a year ago, beating the 6.4 trillion won number that analysts predicted through Refinitiv SmartEstimate. Consolidated sales likely fell over 7% on-year to 52 trillion won, Samsung said. 

The company did not provide a breakdown of how each unit performed in Tuesday’s guidance but flagged a one-off gain in the display business, which counts Apple as a customer. It is likely that increased demand for memory chips helped offset some of the declines seen in other parts of the business. 

Shares initially rose more than 1% before erasing gains to trade down 1.27% as of 9:08 a.m. HK/SIN. 

Samsung’s second-quarter results were “very strong,” driven by the strength in its smartphones and consumer electronics business as well as the expected strength in the memory unit, Sanjeev Rana, a senior analyst at CLSA, said on CNBC’s “Squawk Box Asia.” 

Memory components that are used in data centers and in smartphones make up Samsung’s main profit-making business. 

Rana said he expected another strong quarter for the South Korean tech giant in the three months that end in September, driven by higher overall memory-related earning and a pick up in smartphone shipments in the second half of the year.  Samsung’s display unit is also likely to benefit from supplying parts to Apple for the iPhone 12.

Still, he warned of slight short-term weakness in the memory market. 

“In the second half, we are expecting some mild correction,” Rana said, referring to the average selling prices of memory chips. He explained the correction will be temporary, lasting for two quarters at most. There may also be some weakness on the demand side in the near term, but Rana said he expects a recovery in 2021. 

Analysts have previously said that memory chip demand was boosted by the coronavirus pandemic, which forced millions to work from home and make their purchases online.

Full earnings numbers from Samsung are due later this month. 

[ad_2]

Source link