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Samsung expects lower Q4'18 profit on weak memory demand, smartphone competition

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Samsung expects lower Q4'18 profit on weak memory demand, smartphone competition

Shares in Samsung Electronics Co. Ltd. fell 1.68% in Seoul on Jan. 8 after the smartphone and semiconductor manufacturer said it expects fourth-quarter 2018 earnings to decrease sharply from the previous three-month period "amid mounting macro uncertainties."

The South Korean technology giant expects operating profit for the fourth quarter of 2018 to reach approximately 10.8 trillion won, down from 17.57 trillion won in the third quarter of the same year and from 15.15 trillion won in the final quarter of 2017. Sales are expected to drop to about 59 trillion won from 65.46 trillion won on a quarterly basis and from 65.98 trillion won on a yearly basis.

In a filing aimed at helping "minimize market confusion" over the profit warning, Samsung said earnings from its memory business fell significantly quarter over quarter due to weaker-than-expected demand. Meanwhile, mobile profits declined due to increased marketing expenses in a "stagnant and fiercely competitive" market and flat smartphone sales volume.

Samsung's profit warning came just days after Apple Inc. reduced its fiscal first-quarter 2019 revenue guidance due to weaker than anticipated iPhone sales, especially in Greater China.

Samsung also said it expects earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business. However, earnings are seen strengthening in the second half of the year on the back of expected improvements in the memory market.

As of Jan. 7, US$1 was equivalent to 1,118.69 South Korean won.