Samsung Q3 Profit Drops, But Not As Much As Street Expectations

Samsung Electronics reported its preliminary third-quarter earnings today with profit dropping by 78% on a year-on-year basis which was lower than the street expectation of 80% decline. On the other hand, the profit was well above the previous two quarters. The Korean company's sales fell about 13% to 67 trillion won ($50 billion) in the last three months. Analysts had on average expected a 12% decline. The company reported losses of 4.58 trillion won ($3.42 billion) and 4.36 trillion won ($3.25 billion) in its chip business in the first and second quarter, respectively, as memory chip prices plunged.

The smartphone maker has been struggling with an industry downturn. Mainstay customers, including makers of personal computers and smartphones, have been cutting orders to deal with weak demand for gadgets and excess inventory of chips.

The sales and profit report came in days after the US granted the company and Hynix an exemption to acquire the equipment they need to sustain and expand their chipmaking operations in China. This has lifted some uncertainty hanging over the two companies, allowing them to operate in the world's biggest chip arena over the longer term.

Analysts expected losses in the memory chip business to shrink in Q3 as the company focused on more profitable, higher-end chips such as DRAM chips to be used in artificial intelligence while continuing to cut production of legacy chips.

The detailed earnings release is due on Oct. 31.