Samsung Profit Misses Estimates as Stronger Won Hits Sales
Samsung reported lower-than-projected profit as it lost momentum in memory chips and faced a strengthening South Korean won, according to Bloomberg.
Operating income rose to 15.1 trillion won ($14.2 billion) in the three months ended December, according to preliminary results. That compares with the 16.1 trillion-won average of analysts’ estimates compiled by Bloomberg. Shares fell 1.6 percent.
Prices for benchmark memory chips have leveled off after a year of strong gains, limiting the growth that had powered Samsung to record earnings in the past two quarters. That has combined with rise of about 7 percent in the won against the dollar in the fourth quarter to erode the value of profits earned abroad. Still, rising demand for organic light-emitting diode screens helped to fuel a rise in sales to 66 trillion won in the quarter, compared with the 67.6 trillion won analysts expected.
Samsung’s shares hit record highs in 2017 before sliding in November after Morgan Stanley downgraded the stock citing an expected peak in the memory chips cycle and a slowdown in smartphones. South Korea’s government this month warned about the rise in the won and said it will take steps in the case of one-sided moves in the nation’s currency.
The company’s cash cow has been the memory business. Contract prices for 32 gigabyte DRAM server modules nearly doubled last year while prices for 64 gigabit MLC NAND flash memory chips rose 55 percent in the same period, according to inSpectrum Tech.