In the footsteps of Apple: Samsung announced the first two-year drop in revenue

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Today, on January 8, Samsung Electronics held a reporting conference for the last financial quarter, during which it announced a more than 28 percent decline in revenues compared to the same period of the previous year. According to its results, the total revenue of the company amounted to only 9.7 billion dollars. This is the first drop in Samsung Electronics revenues over the past two years, indicating a sharp decline in interest in Korean branded products.

The drop in revenue announced by Samsung turned out to be so serious that even analysts could not predict it. According to CNBC, even with the least favorable outcome, industry experts predicted the South Korean vendor to 18% higher income than the company received in the end. This is a very noticeable regression even compared to Apple, which received a little more than 5% of the amount that analysts said.


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Why Samsung revenue collapsed

Samsung links the drop in revenue with a drop in demand for memory chips. A similar opinion was expressed by the analyst of the consulting company San Bernstein & Co. Mark Newman, who, however, tried to name the causes of what is happening.

“[The result] that we are seeing today is a consequence of the fact that the sales of memory chips in the fourth quarter of 2018 seemed to have fallen off a cliff. This is largely due to lower demand from data centers as well as smartphone manufacturers, which is explained by a rather weak demand for smartphones.”

According to Newman, the decline in memory sales was quite expected. The continuous growth that companies engaged in data processing have demonstrated over 24 months should have ended in the end, the analyst explains. Amazon, Microsoft, Google — all of them at some point experienced satiety and simply refused further purchases of memory, which for the development of Samsung’s business is of serious importance.

 


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Updated: January 11, 2019 — 12:39 am

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