Samsung, Apple profits fall in 2nd quarter

Patrons trying out Samsung's Galaxy S10 5G phones in Seoul earlier this year. In April, it was forced to delay the release of its Galaxy Fold model after reports of screen problems.
Patrons trying out Samsung's Galaxy S10 5G phones in Seoul earlier this year. In April, it was forced to delay the release of its Galaxy Fold model after reports of screen problems.PHOTO: KT CORPORATION

Samsung earnings drop amid trade row, chip woes while Apple's shift to services paying off

Smartphone rivals Samsung and Apple announced lower quarterly profits yesterday, although the iPhone maker's numbers were stronger than expected.

Apple's growth from services helped offset weaker phone sales, sparking a rally in its shares.

Earnings for the three months to June 30 fell 13 per cent from the same period a year earlier to US$10 billion (S$13.7 billion), while revenue increased 1 per cent to a better-than-forecast US$53.8 billion.

Meanwhile, net profit at Samsung Electronics dived 53 per cent to 5.18 trillion won (S$6 billion) due to a weakening chip market and a trade row between Seoul and Tokyo.

Apple's results beat analyst expectations and its shares rose more than 4 per cent in after-hours trade.

As iPhone sales weakened, Apple has been shifting towards digital content and services sold to the legions of fans of its devices.

It has more than 420 million paid subscriptions across its array of services and is confident that will exceed 500 million next year, said chief financial officer Luca Maestri.

Apple sales improved in the crucial China market, which included a double-digit increase in services revenue driven by strong growth in the App Store.

Sales of iPhones there were also boosted by government stimulus, pricing moves by Apple and trade-in and financing programmes, said chief executive Tim Cook.

  • AT A GLANCE

  • APPLE

    REVENUE: US$53.8 billion (+1%)

    NET PROFIT: US$10 billion (-13%)

  • SAMSUNG ELECTRONICS

    REVENUE: 56.13 trillion won (-4%)

    NET PROFIT: 5.18 trillion won (-53%)

Overall iPhone revenue was down 12 per cent from last year to US$26 billion, but sales of Mac computers and iPads were up, as was a "wearables and accessories" category that includes Apple's smartwatch, smart speaker and popular wireless ear buds.

Turnover from services rose to US$11.5 billion from US$10 billion in the same quarter last year.

Apple launches slated for later this year include an Apple TV+ streaming television service and a new credit card that ties in with its Apple Pay digital payments.

On the other hand, Samsung, which has enjoyed record profits in recent years despite a series of setbacks, is now struggling with chip prices falling as global supply increases.

"The weakness and price declines in the memory chip market persisted... despite a limited recovery in demand," it said.

Its mobile phone division achieved "stronger shipments on new mass-market models but was weighed down by slower sales of flagship models and increased marketing expenses", it added.

Samsung launched its top-end S10 5G smartphone earlier this year after South Korea won the global race to commercially launch the world's first nationwide 5G network. But, in April, it was forced to delay the release of its new and hotly anticipated Galaxy Fold phones after reviewers provided with early devices reported screen problems within days of use.

A simmering dispute between South Korea and Japan, which has seen Tokyo impose restrictions on exports of elements crucial to South Korea's world-leading chip and smartphone companies, is also expected to affect key products.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on August 01, 2019, with the headline 'Samsung, Apple profits fall in 2nd quarter'. Print Edition | Subscribe