Samsung Electronics Co. missed analyst estimates for fourth-quarter operating profit by 22 percent, the most in two years.
That shortfall may be as much a function of sell-side analysts’ financial modeling as Samsung’s inability to deliver stronger earnings. Buy-siders, for example, have been selling down the stock since the middle of the third quarter, an indication that they saw tough times ahead.
The fact that Samsung shares moved largely sideways Tuesday morning, up 0.3 percent by 11:30 a.m. in Seoul, indicates that investors weren't too shocked by the earnings shortfall.
If we go back through the last few times the company’s operating profit failed to hit sell-side expectations, the sentiment already had been at least partially reflected in the stock leading up to the earnings announcement.
This isn’t just a Samsung phenomenon. Global tech stocks have taken a beating over the last few months, though apparently not enough for Apple Inc. to avoid a further 10 percent slump the day it announced revenue would miss estimates.
Samsung investors should take solace. In October, the South Korean giant announced it would curtail capital expenditure this year. The scale of the trimming surpassed expectations by around 10 percent.
This capex cut is a good thing.
By refusing to play chicken with rivals, Samsung will save billions of dollars in expenses over the coming years.
It also means that while others in the industry look for ways to rein in costs amid a global tech downturn, Samsung already got out ahead of the storm. Apple, with limited manufacturing facilities, faces comparatively lower equipment expenses, so will look for savings elsewhere. Chip rival Taiwan Semiconductor Manufacturing Co. is capital-heavy and will face similar challenges as Samsung.
As investors look for places to park their tech-fund money in this uncertain times, it shouldn’t be a surprise if Samsung gets rewarded for its early action.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
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