Apple and Samsung: why the profits of these two mobile giants are falling



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Samsung said in a statement on Tuesday evening that it estimates an operating profit of US $ 9,670 million for the period from October to December last year, 29% less compared to the same period in 2017.

And those weak profits of the world's largest smartphone maker are added to investor concerns for Apple (third on the list after Huawei's Chinese) which last week announced an unusual fall in its profits also in the last quarter of 2018.

Apple's chief executive, Time Cook, said on Wednesday that the company estimates revenue of about US $ 84 billion in the last three months of last year, below a forecast of at least $ 89 billion.

This announcement not only alerted investors, but the stock market in general.

That same day, Apple shares fell 10%, in the amount of US $ 142.19. And in just four trading sessions in 2019, the value of the company's manzanita title has already lost $ 10.

As in other consumer products companies, the year-end season of the year tends to boost the last of the year as the strongest quarter.

But these Apple revenue forecasts (the final results will be published in early February) would mark a fall of almost 5% over the same period last year and would represent the company's first quarterly quarterly decline since 2016.

And the situation in the home of Apple's big rival in the handset market, Samsung, also does not look great for celebrations.

The South Korean company reported a drop in sales of 10% over the last quarter of 2017.

Chinese Economy

What are the main reasons why the profits of Apple and Samsung fell?

Both Apple and Samsung do not usually give explanations about their earnings forecasts, but this time they broke this habit.

Samsung has decided to release a statement with some details about estimates of room profits "alleviating confusion" among investors, because the forecast was well below market forecasts.

"We expect profits to remain subdued in the first quarter of 2019 due to difficult conditions for the memory chip business," he said.

Analysts polled by Reuters expect Samsung's profits to continue falling in 2019 due to the fact that The slowdown in China's economy erodes demand for its chips and phones.

Samsung is one of the leaders in the global smartphone market, but faces increasing competition from Chinese rivals such as Huawei.

Apple's problems also come from China. In a letter to investors, the director of Apple pointed the Asian giant as the source of his difficulties. In that country, it generates about 20% of its income.

"While we anticipate some challenges in the major emerging markets, We did not know how to predict the magnitude of the economic slowdown, especially in China"he declared.

This is the first time in 15 years that the iPhone maker has analyzed its financial results in a letter to its investors.

Commercial war and sales

In addition to problems with the slowdown in the economy, Apple said commercial tensions The United States and China had consumer confidence.

"As the climate of increasing uncertainty weighed on financial markets, the effects seemed to hit consumers as well, and traffic to our retail stores and channel partners in China slowed as the quarter progressed," Cook wrote in the letter .

Finally, the CEO of Apple also acknowledged that Fewer than expected customers in developed countries have opted to upgrade their iPhones.

This confirms that iPhone sales are falling. And some analysts say the new fall from Apple reflects certain problems that the technology company has been dragging for some time.

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