Samsung Electronics said its operating profit in the first quarter could fall 60% from the same period last year, below market expectations and possibly the weakest quarterly profit since the end of 2016.
After the company released its preliminary performance estimate, its stock price rebounded after a brief rise, and many investors have begun to anticipate that Samsung's profits will rebound in the second half of the year, supported by rising chip prices.
Samsung supplies memory chips and panels to its smartphones and Apple (AAPL.O) and servers to cloud computing companies such as Amazon (AMZN.O). Semiconductor business is its main source of profit.
"In the second half of the year, memory chip prices will be soft landing, so the decline will ease, and the new iPHone released later this year seems to bode well for Samsung's display panels and memory chip products," said Kim Yang-jae, an analyst at KTB Investment and Securities.
In a regulatory filing, Samsung Electronics said it expected to earn 620 billion won ($5.5 billion) in the January-March quarter, less than the 6.8 trillion won estimated by analysts interviewed by Refinitiv Smart Estimate.
Quarterly revenue is likely to fall 14% to 52 trillion won from the same period last year. The company will release a detailed performance report at the end of April.
Samsung Electronics eventually closed down 0.2% on Friday, while the Composite Stock Index. KS11 rose 0.1%.
Earlier, the company warned that quarterly results could be disappointing because of falling memory chip prices and slowing demand for panels for Apple's iPhone.
Analysts say Samsung's high-end Galaxy smartphones are also hard to make money because of rising innovation costs, fierce competition from Chinese rivals and consumers'reluctance to upgrade their phones.
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