Thursday, January 28, 2016

Samsung Electronics' Q4 earnings sink 40 percent

Samsung Electronics' Q4 earnings sink 40 percent

Associated Press
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SEOUL, South Korea (AP) — Samsung Electronics reported Thursday a bigger-than-expected decline in fourth quarter earnings as its mainstay smartphone and semiconductor businesses suffered from weakening global demand for consumer electronics.
The South Korean company also warned a recovery in profit is unlikely during the first half of this year due to a tough business environment.
Samsung's net profit for the October-December period plunged 40 percent from a year earlier to 3.2 trillion won ($2.7 billion).
The result fell short of expectations, even after considering the negative impact from foreign currency exchange rates estimated at 400 billion won. A survey of analysts by financial data provider FactSet forecast net profit of 5.1 trillion won.
Sales edged up 1 percent to 53.3 trillion won for the quarter. Operating income rose 16 percent to 6.1 trillion won, in line with Samsung's earnings preview earlier this month.
The latest results reflect additional challenges for Samsung as its semiconductor business, which helped offset declining earnings from smartphones since mid-2014, joined the mobile division in a profit slowdown.
Weakening global demand for smartphones and other consumer electronics products is taking a toll on Samsung's sales of mobile components to companies such as Apple, as well as sales of Samsung's own mobile devices.
The company is the world's largest maker of memory chips that are used in PCs and mobile devices. It is also the world's largest maker of smartphones and television sets.
For the full year, it earned 19.1 trillion won ($15.8 billion), down 19 percent from the previous year and the lowest level in four years. It was the second year in a row with a decline in annual net income after the company's earnings peaked at 30.5 trillion won in 2013.
The logo of Samsung Electronics is seen at the company's headquarters in Seoul July 6, 2012. REUTERS/Lee Jae-Won/FilesThomson ReutersThe logo of Samsung Electronics is seen at the company's headquarters in Seoul
During the final quarter of 2015, the semiconductor business reported its first quarter-over-quarter profit decline in more than one year. It logged 2.8 trillion won in operating income, about 25 percent lower than the previous quarter but slightly higher than a year earlier.
In addition to the softer global demand for mobile devices and PCs, an oversupply of memory chips that pushed down prices also drove the weaker-than-expected profit growth.
The mobile phone business posted its second straight quarterly profit decline with 2.2 trillion won in operating income. Even though Samsung rolled out its high-end smartphones sooner than usual, including the Galaxy Edge series with curved displays, they failed to increase premium smartphone shipments as consumers flocked to cheaper smartphones.
Samsung is not the only smartphone maker struggling to increase sales of premium smartphones. Apple, which reported earnings earlier this week, forecast its first year-over-year sales decline in 13 years.
The maker of Galaxy smartphones will likely not see a revival in its profit anytime soon.
"It would be a challenge to maintain the 2015 operating profit level as we expect weak macroeconomic conditions and the IT demand to persist during the first half," Robert Yi, a senior vice president at Samsung, said on a conference call.
"However, we expect the business conditions to improve in the second half driven by the strong seasonality in set businesses," he said referring to mobile phones, home appliances and TVs.
Apparently aware of growing pressure to seek new revenue sources, Samsung gave out some hints about its future plans. It pointed to transparent, mirror, automotive and flexible displays as future display business areas. And it singled out home and health as areas it will initially focus on with Internet-connected gadgets and home appliances.
Samsung reiterated its promise to increase shareholder returns and announced an additional plan to buy back and cancel shares. But the move did little to shore up its share price. After the earnings release, the company's shares traded 3 percent lower.

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Facebook explodes on Q4 earnings beat

Facebook explodes on Q4 earnings beat

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The stock exploded more than 13% after Facebook beat estimates on the top and bottom line, as well as on the company's solid user growth.
Here are the most important numbers:
  • Revenue: $5.84 billion vs. analyst expectations of $5.37 billion — and up 52% year-over-year.
  • Adjusted earnings per share (EPS): $0.79 vs. $0.68 expected.
  • Monthly active users (MAUs): 1.59 billion, an increase of 21% year-over-year — vs. expectations of 1.58 billion.
  • Daily active users (DAUs): 1.04 billion, an increase of 17% year-over-year — and in line with expectations.
Along with strong growth across the board on those key numbers, Facebook also proved that it continues to strengthen its mobile business, noting that that's where it reels in 80% of ad revenue.
That's up from 69% at this time last year — and from 78% last quarter. For even more perspective, that's up from 23% in 2012.
That's tied to the fact that more of Facebook's users are accessing the social network from their smartphones. Mobile MAUs in December hit 1.44 billion, up 21% year-over-year, and mobile DAUs hit 934 million — up 25% year-over-year.
Here's a look at how Facebook's userbase has grown, according to BI Intelligence:
FBBI Intelligence
FBBI Intelligence
On the earnings call, COO Sheryl Sandberg emphasized that Instagram's ads business has been growing nicely, although the company declined to break out any specific revenue numbers.
She also said that she was pleased with the growth of Facebook video as well as its video-ad product. Users are now watching more than 100 million hours of video on the site per day.
Here are the other important numbers (emphasis added):
  • Costs and expenses of $3.21 billion, which is up 21% year-over-year, with R&D at$1.31 billion. But Facebook tightened its costs as a percentage of its revenue this quarter. The company's operating expenses were down sequentially and year-on-year in all categories.
  • However, on the earnings call CFO Dave Wehner warned investors to expect significant spending in 2016. He forecast non-GAAP expenses increasing between 45 and 55%.  
  • As usual, most of Facebook's revenue came from advertising, but about 3.6%, or $204 million, came from payments and other fees. That's down from 21% in Q4 2014, whichFacebook has attributed to a drop in revenue from gaming apps.
  • Free cash flow was $2.14 billion in Q4.
  • Most of Facebook's revenue comes from North America and Europe — Facebook iskilling it in the US — with only about 25% ($1.4 billion) coming from Asia-Pacific and the rest of the world. But those areas account for 65% of its monthly active users. The average revenue per user in those regions is still tiny, compared to in the US — $1.59 and $1.22, respectively, vs. $13.54 and $4.50 in the US and Europe.
  • Facebook recently made a big press push around its efforts in emerging markets and how it's optimizing its content and, importantly, its advertising to work well in areas of the world. But it seems that those efforts haven't shifted the average revenue-per-user numbers yet — although Facebook notes that currency headwinds also had an impact.
Here's a look at where Facebook's revenue comes from geographically:
FBFacebook
And as you can see, Facebook still makes the most money per user on US members:
FBFacebook
Here are some highlights from the earnings call:
Facebook CEO Mark Zuckerberg shared some other stats, like that people watched 100 million hours of video, more than 1 billion people used FB Groups in a single month, and 80 million people use Facebook Lite, the service optimized for lower-bandwidth.
He also said that WhatsApp has nearly 1 billion MAUs and that the company plans to roll out new ways to let businesses use it to communicate, like it has done with its other chat app, Messenger.
He ended his prewritten comments with a bit of sappiness, saying that since he had his daughter a few months ago, he spends more time reflecting on Facebook's legacy.
He said that thinking about how the company can "leave a better world for the next generation" is something that he thinks about "every day as we continue building Facebook."
Sandberg also said that Facebook is happy with the growth of Instagram's ad business, adding that 98% of top advertisers on Facebook also advertise on Instagram. Later in the call, she added that although some advertisers will likely choose to focus on one or the other, she expects that Facebook will also steal portions of their advertising budgets from other platforms.
"We really encourage people to measure their ROI and compare us to other platform," she said.
Facebook CFO Dave Wehner said that Facebook has increased its ad frequency this year, but that the average price per ad went up to (total impressions were up 29% and price per ad was up 21%). He also warned that 2016 would be another significant investment year, with non-GAAP expense guidance between 45% and 55%.
Following a question from investors, Zuckerberg also said that Facebook plans to keep experimenting with different ways to let businesses use Messenger. That's exciting for investors, who are clamoring for when Facebook will introduce a way to make money from the chat app.
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Deutsche Bank lost €6.8 billion in 2015 — now management's bonuses are cancelled

Deutsche Bank lost €6.8 billion in 2015 — now management's bonuses are cancelled

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John CryanReutersJohn Cryan pictured in 2009.
Deutsche Bank posted a huge €6.8 billion (£5.1 billion, $7.4 billion) loss for 2015 — its first annual loss since 2008.
After the news, Deutsche Bank'ssupervisory board confirmed that the German lender's management board would not get bonuses for 2015.
Deutsche Bank confirmed on Thursday morning in its 2015 results statement that in the fourth quarter of last year it made a €1.15 billion pretax loss, compared with a net profit of €323 million a year earlier.
This was mainly due to €1.2 billion worth of litigation charges for the period. This brought total litigation charges to €5.2 billion for 2015, up from €2 billion booked in 2014.
But investors expected this huge loss.
Last week, Deutsche Bank warned markets that it was facing a net loss of about €6.7 billion for last year.
But restructuring charges tipped the bank's net loss over this forecast, as it cost €800 million in the fourth quarter of last year to pay for severance packages after the group decided to close numerous retail banking branches. Another €100 million was lost because of Deutsche Bank's hiving off Postbank.
"In 2015 we made considerable progress on the implementation of our strategy. The much needed decisions we took in the second half of the year contributed to a net loss for the fourth quarter and full year," said John Cryan, Deutsche Bank's co-CEO.
"We are focused on 2016 and continue to work hard to clear up our legacy issues. Restructuring work and investment in our platform will continue throughout the year.
"We know that periods of restructuring can be challenging. However, I’m confident that by continuing to implement our strategy in a disciplined manner, we can and will transform Deutsche Bank into a stronger, more efficient, and better run institution."
Full-year revenue rose by 5% to €33.5 billion, though revenue in the fourth quarter cratered by 15% year-on-year to €6.6 billion.
Deutsche Bank will release its final financial statements on March 11.
Later Thursday, Cryan confirmed to reporters in a news conference that Deutsche Bank'ssupervisory board took the decision not to award bonuses to management.
"In the context of the overall performance of the bank last year, which the board has to own ... that is a decision which I respect," Cryan said, according to Reuters and the Financial Times, which were at the conference.
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Wednesday, January 27, 2016

Smartphone shipments hit record high in 2015: report

Smartphone shipments hit record high in 2015: report


smart.jpg
More than 1.4 billion smartphones were shipped worldwide last year in a new high for the sector with Chinese handset makers racking up the biggest gains, an industry tracker said Wednesday. 
PHOTO: REUTERS
[SAN FRANCISCO] More than 1.4 billion smartphones were shipped worldwide last year in a new high for the sector with Chinese handset makers racking up the biggest gains, an industry tracker said Wednesday.
Global smartphone shipments for 2015 jumped slightly more than 10 per cent to an unprecedented 1.43 billion, said International Data Corporation (IDC), releasing its preliminary figures.
South Korean consumer electronics giant Samsung remained the top smartphone maker, shipping 85.6 million units in the final quarter and 324.8 million for the year, according to the IDC's Worldwide Quarterly Mobile Phone Tracker report.
Second-place Apple shipped a record-setting 74.8 million iPhones in the quarter and were up slightly more than 20 per cent to 231.5 million units for the year, said IDC, a day after Apple warned that iPhone sales are set to fall for the first time.
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"Apple assured the public that demand for its premium smartphones is still alive and kicking," said IDC's Anthony Scarsella, referring to the new figures.
"A new record-setting quarter for Apple indicates consumers continued demand for Apple's latest offerings regarding upgraded hardware and software." Samsung faces increasing pressure from US-based Apple in the high-end smartphone market and from Chinese firms such as Xiaomi and Huawei when it comes to mid or low-priced handsets, according to IDC.
"Usually the conversation in the smartphone market revolves around Samsung and Apple, but Huawei's strong showing for both the quarter and the year speak to how much it has grown as an international brand," said IDC's Melissa Chau.
"While there is a lot of uncertainty around the economic slowdown in China, Huawei is one of the few brands from China that has successfully diversified worldwide." Huawei shipped 32.4 million smartphones in the final quarter of 2015, pushing its total for the year to 106.6 million.
Huawei became the fourth mobile phone maker ever to ship more than 100 million units in a year, joining Apple, Samsung and Nokia.
"Huawei is poised to be in a good position to hold onto a strong number three over the next year," Ms Chau said.
AFP
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