Samsung Electronic’s first quarter profit likely to fall 60%

Samsung Electronic has warned its first-quarter operating profit could slide 60% from a year earlier, missing estimates.

The smartphone and memory chips maker warned that the first-quarter would likely be disappointing due to falls in chip prices and slowing demand.

Samsung said January-March profit was likely 6.2 trillion won ($5.5 billion), below the 6.8 trillion won estimate from analysts according to Refinitiv SmartEstimate.

The company also said revenue also likely fell 14% from a year earlier to 52 trillion won.

The firm will disclose detailed earnings in late April.

Samsung share price

Samsung shares rose briefly before trading flat following the guidance announcement. Meanwhile, the broader market was up 0.2% at the time of writing.

Investors will have their eyes peeled for positive improvements in chip prices in Q2, hoping for better results.

Samsung shares dipped 0.11 in Friday morning trade. Analysts say the relatively neutral reaction in the stock market was likely because investors already had expectations that the profit would drop in the first quarter, following on from the company's warnings.

Galaxy S10 in high demand

Analysts also say some models from Samsung's premium Galaxy smartphones are also struggling to be profitable due to the rising costs of innovation. It is also observed by analysts that fierce competition from Chinese rivals and the lack of consumer upgrades have also played a part in lack of demand.

However, there have been bigger and better than expected demand for Samsung's flagship device, the Galaxy S10. The long-awaited phone was released to retailers on March 8 this year, with pre-orders coming in at some of the highest in the company had seen, according to Samsung.

Analysts predict the Galaxy S10 phone could reach 38 million shipments in this year alone.

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