Samsung bears win after ‘stock swings’

Bloomberg

Samsung Electronics Co. ended the day weaker, giving into bears worried about the outlook for the first half following today’s disappointing fourth-quarter earnings estimates.
The shares swung between a gain of as much as 1.2 percent and a loss of 2.1 percent before finishing the day 1.7 percent lower. The stock rose as analysts said the bleak fourth-quarter results on slumping chip demand were largely factored in, but fell back on pessimism over what comes next.
The South Korean company reported preliminary operating income dropped to 10.8 trillion won ($9.65 billion) for the period through December, missing the average analyst estimate compiled by Bloomberg by 22 percent.
Samsung shares lost 24 percent last year, capping its worst performance since 2000, with the stock taking a beating as chip prices slid and demand for new smartphones slowed. The world’s largest smartphone maker by shipments has been increasingly dependent on chips for profit growth, riding on a spike in global data traffic while yielding to stiffer competition for phones.
Semiconductors accounted for more than three-quarters of Samsung’s total profit, compared with the first quarter of 2013 when its phone business represented almost three-quarters of profit.
HI Investment & Securities’s Song Myung-sup said, “It’s a shock.” “It’s not just Apple, but also smartphone, server and PC manufacturers that are
not buying.” “While the US-China trade war hangs over them, these customers just won’t accept current prices, and Samsung faces pressure to cut chip prices.”