Samsung forecasts a 56% drop in Q2 earnings

Korean smartphone giant and Apple’s (NASDAQ: AAPL) primary rival, Samsung, on Friday, said it expects to see a 56% drop in its Q2 operating earnings to 6.5 trillion Korean won ($5.56 billion). Revenues for the quarter, are meanwhile, estimated to decline approximately 4% to 56 trillion Korean won ($47.89 billion).

Though the company did not give a reason for the top and bottom line deterioration, market observers link this to the falling prices of DRAM and NAND chips. It may be noted that the chip division accounts over three-quarters of Samsung’s total revenues.

Samsung ended Friday’s trade down 0.75% in the Korea Exchange. The stock has gained 18% since the beginning of this year.

Meanwhile, the company said its estimates include a one-time gain related to the display business. Here, the company is most likely referring to the compensation of 800 billion won ($684 million) paid by Apple for not meeting the minimum order requirement for OLED screens. Without this cost, the Q2 results would be worse.

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A proper insight into the company’s performance will be available once it publishes its full quarterly earning  later this month.   

Samsung is set to launch its latest premium handset, Galaxy Note 10, in August first week. The Korean company will be hoping to wipe off some of the weakness with the arrival of the new phone. The launch of the first bendable smartphone, Galaxy Fold, is also in the pipeline.

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