Samsung's network business is starting to feel the effects of the ongoing coronavirus crisis as its sales in the first half of 2020 are already way below 2019 results. Insiders close to the company claim network revenue plummeted as much as 30% compared to the same period last year. While Samsung expects performance to improve by fall, its latest turnover projections are said to be hovering around the 4 trillion won mark for 2020 on the whole. That equates to $3.35 billion, down nearly 20-30% year-over-year.
A decrease in both domestic and overseas telecom investments in 5G deployment is said to be the primary reason for the slump. Naturally, that downward trend is a direct result of the COVID-19 pandemic and The Great Lockdown it induced.
Cautious optimism ahead of Samsung's next earnings guidance
While these unofficial figures coming out of South Korea should be confirmed in late July, the extent of Samsung's decline in the networking segment won't get much clearer once the company publishes its next earnings report. That's primarily on the account of how it reports performance in the first place; its network unit is part of a larger IT & Mobile Communications division, which is a $90 billion business whose earnings are rarely broken down past the basics.
None of that is to say investors are particularly pessimistic about Samsung's long-term network prospects. Regarding 5G, in particular, a much larger concern is how to keep up in the smartphone department where both Huawei and Apple are expected to outpace Samsung's mobile device sales by this time next year, marking an end to its unexpected honeymoon period in the market. Nevertheless, cautious optimism is in the air ahead of tomorrow's earnings guidance.
For added context, Samsung's network unit at least has a much clearer road to relatively quick recovery than its TV business does, and the management reportedly has some pretty insane expectations of the latter.
