Samsung unprecedentedly preannounces ‘earnings shock’ in Q1

Samsung Electronics on Tuesday announced that it foresees lower-than-expected earnings for the first quarter of this year.

“Due to the worse-than-expected weakening of the display and memory markets, the company’s first-quarter performance is predicted to be poorer than market forecasts,” the tech giant said in a statement.

An announcement like this -- issued before the release of preliminary earnings forecasts, slated for the first week of April -- is unprecedented and raises concerns that another earnings shock might be ahead for the company, after the first one in the final quarter of last year.

“It is an unprecedented announcement, but it was a decision for investors,” a Samsung official said.

According to the financial market, Samsung’s operating profit for the first quarter is estimated to be around 7.9 trillion won, down 49 percent from the same quarter last year.

The display business suffered price falls in liquid crystal display panels and declining demand for flexible organic light-emitting diode panels, the company said.

Bigger-than-expected falls in memory chip prices took a toll on Samsung’s memory business too, it said. Prices of some premium DRAM chips for servers plunged more than 20 percent in the first quarter.

“The company will focus its efforts on improving cost competitiveness by using its resources efficiently in the short run, while planning for strategic investments in research and development to strengthen core capabilities for sustainable growth in the long run,” the statement said.

By Song Su-hyun (song@heraldcorp.com)