8 ms·
Samsung Profits Plunge 95%
- andirk 4y ago[flagged]
- markisus 4y agoMaybe they made similar revenues but massively increased costs. Amazon was famous for this sort of thing.
- joakleaf 4y agoFrom the article: Revenue fell 18% to 63.7 trillion won.
- pavlov 4y agoA 95% drop in profit doesn’t mean they sold nothing. Looking at profit alone doesn’t tell how much product they actually shipped. It might be that they sold more units but at razor-thin margins.
- kadoban 4y agoYou seem to be confusing profit with revenue. You can sell a bunch of stuff and not make a profit.
- Fomite 4y agoIt feels like HN should be one of the places that best understands this.
- andirk 4y agoI agree. I misunderstood profit as gross income, and even with a quarter of negative profit, a business may very well be doing fine depending on their profit margin (electronics ~2-10%).
- hedora 4y agoI'm pretty sure the clickbait headline is designed to cause that confusion.
- pavlov 4y agoHow? The headline is both correct and very clear, it’s just four words. If the reader doesn’t understand what profit means, the problem is on their side. People blame the media for the weirdest things these days.
- nolok 4y agoFYI it's neither correct nor very clear in that Samsung Electronics is not Samsung (the overall group).
- pavlov 4y agoThat’s a great point! The corporate structure of Samsung is confusing to me. I have no idea which subsidiaries report separately and why. But the problem with the headline is not that it somehow sneakily conflates revenue and profit.
- andsoitis 4y agoWikipedia to the rescue, but that complicated: https://en.wikipedia.org/wiki/Samsung https://en.wikipedia.org/wiki/Samsung
- RheingoldRiver 4y agoI would argue it's a little bit of both. You have to admit, they deliberately are taking advantage of the fact that this sounds like a very interesting statistic "wow!! Profit fell by this huge amount!!" when a lot of it could be a very deliberate decision by the company to spend more money. If revenue fell by more than profit, they would pick that instead. The standard for headlines is to get the reader to click, not to inform the reader (even when the article itself is quite informative). I've been reading books with marketing advice, and one of them literally suggests the practice of "false facts," where you deliberately compare things that shouldn't be compared in order to make your product seem more appealing, for example an audiobook that costs $25 to an in-person class that costs $10,000. This headline is kinda-sorta doing that, albeit on a scale of 2/10.
- lelanthran 4y agoIt's profit they are looking at, not revenue. Just splurging on new sites/equipment/assets could drop their profit to zero while their income remained the same.
- kgwgk 4y agoNote that "new sites/equipment/assets" are depreciated over their estimated useful life - they impact profit (i.e. net income) gradually over time.
- pavlov 4y agoThe drop is primarily due to lack of demand and overproduction in memory chips. From the Financial Times: Samsung Electronics reported a 95 per cent drop in first-quarter profits on Thursday, as tech demand remained sluggish in the face of inflation and higher interest rates. The Korean semiconductor giant’s operating profit fell to Won640bn ($478.6mn) from Won14.12tn in the first three months of 2022, amid a sharp drop in global demand for memory chips. The results were consistent with estimates released earlier this month, when Samsung said it would make a “meaningful” cut in memory production to ease a glut. On Thursday the company said it expected a “limited demand recovery” as major cloud service providers invest more conservatively and customers adjust their inventories.
- asddubs 4y agocan we please have ssd prices drop again at some point then?
- Dalewyn 4y ago[flagged]
- frostburg 4y agoThat specific model and size had reliability issues (excessive wear) which might contribute to its low price.
- dotancohen 4y agoAs a consumer, how would I learn that? For any arbitrary storage (not memory) that I am considering?
- frostburg 4y agoNot easily; you can look at what big buyers (cloud providers, system integrators) do, but they can get blindsided too (like with those Samsung units). Don't buy SMR hard drives.
- plantain 4y agoTerrible software quality, falling hardware quality, every possible corner cut on support. Inevitable.
- gniv 4y agoSamsung's profits are volatile but this is indeed an unusual quarter historically: https://www.statista.com/statistics/237093/samsungs-operating-profit-quarterly-figures/ https://www.statista.com/statistics/237093/samsungs-operatin...
- paganel 4y agoInteresting link. If I'm reading that chart right these are the lowest profits reported by Samsung since Q1 2009 (that is around ~600 billion Won both then and now).
- sidcool 4y agoTheir phones have become so adware and malware afflicted. Hope they come to senses. .
- hackernewds 4y agoThey will desperately double down on revenue/user instead of user growth.
- _puk 4y agoWhilst I agree, that's what I don't get. When a user is expected to have to repurchase a product in the future (e.g. phone upgrade), do they look at it as squeezing as much revenue out of a single user whilst they own a single device, or over lifetime ownership of many devices? You can imagine a scenario where they squeeze an extra 20% revenue whilst that user owns their device (great for this quarter) at the cost of 100% of future revenue when the user moves to another brand on renewal. If the average phone upgrade is 21 months [0], then this feels like a short enough timeframe for this to be felt in the numbers. 0: https://www.counterpointresearch.com/smartphone-users-replace-their-device-every-twenty-one-months/ https://www.counterpointresearch.com/smartphone-users-replac...
- kiwijamo 4y agoWhich models? My personal S series has no such thing but I was surprised that my work A series came with ads and stuff. Seems to be a similar strategy to Microsoft pushing crap on the Home versions of Windows but not doing so on the corporate versions.
- sidcool 4y agoM13
- quickthrower2 4y ago95% “plunge” is a funny number for profit: sounds catastrophic but there could be many stories behind it. Including higher R&D. Revenue 95% plunge would be somewhat different! Margin 95% plunge would too.
- hackernewds 4y agoit is due to diving demand and miscalculated orders, so it is indeed unintentional plunge.
- em500 4y agoYup. Unlike revenue, profits can turn negative, in which case % changes become nonsensical.
- GauntletWizard 4y agoI'm not sure; I think "Samsung Profits Plunge 200%" would be pretty easy to make sense of, in that it would mean "They lost as much this [period] as they gained last [period]". Likewise, you could represent that as -200% change, or -100% of last quarters profits.
- throwawaylinux 4y agoIf profit can refer to a loss then why would you assume they had a positive profit in the last period? Perhaps not quite so easy to make sense of. In any case, hopefully next quarter their losses can crater by 2000%, i.e., go from a small profit to a larger one and get back to about where they were.
- quickthrower2 4y agoDon’t forget to average the logs not the %’s :-)
- throwawaylinux 4y ago
- gsatic 4y agoThe Attention Economy/ads have directly or indirectly funded cheap smartphones/chips for 15 years now. Got to be some sort of peak since attention is scarce and shrinking. Future Demand modeling doesnt really take collective availble attention into account. I think we are going to see demand mainly driven by machine to machine requiremnts. The human requirement are probably peaking.
- puregram 4y ago[dead]
- metaphor 4y agoReference slide 5 from the cow's mouth[1] for this article's unlinked source. On first blush, the headline just looks like a consequence of quarterly revenue miss when there's an implied floor to both cost of sales and operating expense in the face of elevated FX headwinds and substantial macro uncertainty. TSMC posted poor results last week, not dissimilar to Texas Instruments on Tuesday. Now we see Samsung join the club, and the trend is likely to be no different for Intel after market close today. All the while Nvidia has been trading in the $270-280 range on pure AI hype euphoria, completely oblivious to $2+ billion of deprecated Ampere architecture inventory glut, the export restrictions hammer that dropped last year when China sales alone accounted for over 21% of FY22 revenue, and more recently, AIB manufacturers informed that RTX 4070 production is being paused a mere 1 week after launch in an attempt to prevent inventory buildup, just to call out a few. [1] https://images.samsung.com/is/content/samsung/assets/global/ir/docs/2023_1Q_conference_eng.pdf https://images.samsung.com/is/content/samsung/assets/global/...
- poisonborz 4y agoFew events show how rotten the economic incentives are than this GPU scarcity: there are now massive inventories and over-production, huge demand, but prices are still sky high. Nvidia would rather destroy its inventory than go for pre-crypto prices. A massive amount of users stuck on 5-8 year old cards with still no good choices to upgrade. https://store.steampowered.com/hwsurvey/videocard/ https://store.steampowered.com/hwsurvey/videocard/
- ragazzina 4y agoWhy are AMD or any other competition (I don't follow this sector very closely) not taking advantage of this and compete on price?
- metaphor 4y agoThe big picture I'm seeing is there's a game being played[1], but to your point, AMD did respond to RTX 4070 launch by dropping prices on RX 6800 series GPUs[2]. [1] https://scholarworks.umass.edu/econ_workingpaper/343/ https://scholarworks.umass.edu/econ_workingpaper/343/ [2] https://news.ycombinator.com/item?id=35663511 https://news.ycombinator.com/item?id=35663511
- ta93754829 4y agoi hate it when I only make $500m profit
- mjd 4y agoThis headline is very misleading. It actually means that Samsung Electronics' profits are down 95% Samsung is an enormous conglomerate of which Samsung Electronics is only one of many sub-companies.
- isanjay 4y agoThank you for the comment. I was wondering about the same thing
- kmoser 4y ago"Profits are down 95%" is the key takeaway here. The article (and the accounting world in general) misleadingly uses words like "loss" to mean "not as much as the last time we measured," unlike how most laypeople interpret the word to mean "expenses exceeded revenue so we are in the red." In fact they are still in the black, only much less so than before. You can't "lose" something that wasn't yours to begin with.
- faeriechangling 4y agoSamsungs entire history is of them surviving collapses in their profitability while they endured until things turned around, so I doubt they’re all that shaken. Samsung Electronics is heavily involved in the cyclical semiconductor business which is a business infamous for violent downswings and they seem to be taking a beating from the memory glut.
- arisAlexis 4y agoBut it's not their whole business just memory
- eunos 4y agoWhen YMTC gaining their hold it's gonna be lit
- DeathArrow 4y agoEverybody and their mom were building chip fabs during pandemics. All people predicted the sales will grow.
- oskarkk 4y agoThey're still building them, it's not like you can build a fab in 2-3 years. The push to increase (global) chip production capacity is a long term strategy. And for many it's also national security strategy (moving production away from Taiwan). This plunge in profits is rather just a temporary dip, I don't think that anyone expects that chip demand will not be generally growing over the next 10-20 years.
- missedthecue 4y agoIn a few years I wonder if governments will be looking at the massive subsidies they're paying every year just to keep these fabs afloat during the obvious upcoming chip glut and wonder what they were thinking. Demand for chips will continue to grow (historical growth is about 5% a year) but I don't think the market can support a dozen new fabs around the world without taxpayer money. that's just too much supply and extremely expensive insurance for "national security".
- oskarkk 4y agoChina attacking Taiwan is a very real possibility, and costs of completely losing access to Taiwanese chips would be much higher than these subsidies. Imo, this expensive insurance is necessary.
- jwie 4y agoThere was an opportunity here to explain why this isn't a big deal. This entire article is devoid of any synthesis or value added information. If I saw this on DNYUZ I wouldn't give it a second look, but CNN has lesser aspirations .
- jasode 4y ago>This entire article is devoid of any synthesis or value added information. If you look at the byline in this CNN article, you'll notice it says "Reuters". Reuters offers a "news wire" service with articles of generic factoids and syndicated to various news outlets like CNN: https://en.wikipedia.org/wiki/News_agency https://en.wikipedia.org/wiki/News_agency By design, news wire articles (business, politics, etc) don't have value-added synthesis or insightful analysis because the generic content is created quickly for fast dissemination. It's not an "opinion piece" like a Matt Levine article or The Economist editorial/analysis.
- rasz 4y agoSo can I finally have my boring diodes and line drivers at pre pandemic prices please? No more $1 for SOIC20 chips that were $0.1 4 year ago, ok? Gee, we switched to manufacturing high end parts nobody buys ... and people stopped buying our wares, what to do indeed.