Despite launch of new 5G phones Samsung expects slight gain in Q1 profits

Thanks to the time difference, it is now Tuesday morning in South Korea even as we countdown the few minutess remaining until Monday comes to an end in the United States. And Samsung has released a report that includes its earnings guidance for the first quarter of 2020. This period, which covers the first three months of the year, is estimated to have brought Samsung 55 trillion Korean won ($45.02 billion USD) in revenue and 6.4 trillion Korean won ($5.23 billion USD) in operating profit.

Those figures would result in gains of 5% and 2.7% over last year's Q1 revenue and operating profit numbers respectively. It also slightly tops analysts' estimates of 6.2 trillion Korean won in operating profits for the three months. On a sequential basis, sales are estimated to have declined 8.1% from 2019's fourth quarter to the first quarter of 2020 while operating profits are expected top have declined 10.6% over the same period.

During the quarter, Samsung released its new Galaxy S20 flagship series which includes its most ambitious phone to date, the Galaxy S20 Ultra 5G. The phone features a 6.9-inch Dynamic AMOLED display with a 120Hz refresh rate and a resolution of 1440 x 3200 (QHD+). This works out to an aspect ratio of 20:9. Under the hood, you'll find the Snapdragon 865 Mobile Platform everywhere but Europe; in the latter continent the device is powered by the Exynos 990 SoC.

The quad-camera set up in the back includes a 108MP camera; with 9:1 pixel binning, the sensor produces sharp 12MP images with less noise. The 48MP telephoto camera includes a periscope allowing it to deliver a 100x hybrid zoom that the manufacturer calls "Space Zoom." There is a 12MP Ultra-wide camera and a Time of Flight (ToF) depth sensor.The front punch-hole selfie snapper weighs in at 40MP. Keeping the lights on is a 5000mAh battery which not only has to provide energy for the faster refresh rate, but also to help the phone stay connected to a 5G signal. The basic model, with 12GB of memory and 128GB of storage, is priced at $1,399.99. Right now, there is a slight 3-day delay on shipments from Samsung.

Also released during the first quarter was Samsung's second foldable device. The Galaxy Z Flip opens and closes around the horizontal axis and fits in a pocket. When a smartphone is needed, the device opens up to produce a 6.7-inch display. With 256GB of storage, the phone is priced at $1,380.

Memory chips are Samsung's biggest business and the demand-supply balance has been showing too much of the latter and not enough of the former. But analysts see a turnaround. For example, Nomura's head of research for Korea, CW Chung, expects the unit to report year-over-year growth in April. Chung told clients earlier this month that memory chip prices will increase during the first quarter with further price increases expected to speed up in April. And while that sounds like good news for Sammy, there's more. Despite the disruptive nature of the coronavirus pandemic, Chung says, "We have not seen any order cuts from customers."

The analyst stated, "Considering the current supply and demand scenario, we see low possibility of a market double-dip yet, but if COVID-19 outbreak continues into 2H20, we see higher possibility of a market double-dip." That's because Chung notes that if the pandemic continues during the second half of the year, it could screw up the demand-supply balance of the memory chip market and send the average price into a downward spiral. Otherwise, despite the odds of a slowdown in the consumer electronics business (including smartphones) the memory chip market is strong.

Investors responded warmly to the report with Samsung's shares up 1.33% to a price of 49,350 Korean won ($40.39 USD).