Turns out Apple is not the only company expecting to disappoint investors with its next set of quarterly results — Samsung and LG are in the same boat. Whether or not it's for precisely the same reasons is unclear, but it seems a plateauing smartphone market is at least partially to blame for all three companies' guidance misses.
In Samsung's case, the tech giant estimated its operating profit for the three months ended December was approximately 10.8 trillion Korean won (approximately $9.67 billion), which is roughly 29 percent down year-over-year and about 18 percent less than the 13.2 trillion won predicted by analysts. The corporation blamed the decline mainly on poor demand in its memory chip business, as well as heightened competition in the smartphone market. Samsung doesn't expect the memory business to pick up much in the next quarter (analysts believe data center customers like Amazon, Microsoft, and Google have enough memory for the time being), but the company hopes for improvements in the second half of the year.
Meanwhile, shortly after Samsung's announcement, fellow South Korean company LG noted that its fourth quarter operating profit likely fell 80 percent from the same period a year earlier. The company estimated profit of 75.3 billion won (around $67 million USD) for the three months ended December. Analysts had estimated a profit of 387 billion, on average.
While LG didn't provide any reason for the decline, analysts suspect earnings were lowered by marketing expenses for new smartphones and high year-end bonuses. Both LG and Samsung will disclose detailed earnings later this month.
These announcements come after Apple CEO Tim Cook sent a letter to investors last week cautioning them not to expect strong first quarter earnings since the company had sold fewer iPhone upgrades than expected, citing its Chinese market in particular, as well as "some developed markets."
Each company, of course, has a unique mix of products and services, but with all three citing a hyper-competitive mobile market as one of the main factors in declining profits, it's pretty clear the stagnancy of the smartphone market is becoming a major business issue. These companies are no doubt looking for hope in the next generation of wireless technology but for now, anything that might differentiate them from their competitors will do. Foldable phones, here we come.