Samsung is flying high. Here’s what could bring it down to earth

Samsung is riding a wave of good news, but there could be bumpy times in the year ahead.

5 stunning stats about Samsung 5 stunning stats about Samsung

Samsung is crushing it at the moment, but keeping up that momentum could be tough.

The South Korean tech company shrugged off a series of setbacks in the past year and a half — including fire-prone phones and jailed executives — to post record earnings and become the world's biggest chipmaker.

Samsung (SSNLF) is the world's largest maker of smartphones, but it also makes chips and other parts for all kinds of electronic devices. On Wednesday, it reported operating profit of about 54 trillion won ($50 billion) for 2017, a new annual record.

Related: Samsung unveils special edition Galaxy Note 8 only for Olympians

Samsung's revenue just from its computer chips business climbed to around 74 trillion won ($70 billion), beating rival Intel's (INTC) total revenue of $63 billion.

But analysts say Samsung, South Korea's biggest company, could face bumpy times ahead.

The end of the chip boom?

Samsung's surging sales have benefited hugely from strong demand for memory chips, which are used in everything from smartphones to medical equipment.

But some analysts say the market may be peaking. Morgan Stanley alarmed investors with a report late last year suggesting the so-called "super cycle" in memory chips could soon be over.

Big chipmakers are playing down those fears.

Samsung said Wednesday that it expects stable supply-and-demand conditions for memory chips in 2018.

Apple's business

Samsung's fortunes are in part tied to those of rival smartphone maker Apple (AAPL).

The U.S. company buys components like chips and screens from Samsung to use in iPhones and iPads.

Samsung supplied flexible screens for the iPhone X, but Apple is reportedly cutting production of the pricey smartphone because of lackluster sales.

Related: Apple is set to report a giant profit. But iPhone X demand worries investors

To meet demand from Apple last year, Samsung invested heavily in flexible screen production. That means a drop in demand will have a "key negative impact on earnings in 2018," according to SK Kim, an analyst at investment bank Daiwa.

Currency costs

Another potential concern for Samsung's bottom line is South Korea's currency.

A stronger won drives up the price of Samsung's key products, making them less competitive on global markets.

"Samsung is exposed to foreign exchange risk arising from various currency rate fluctuations," analysts at Susquehanna International Group wrote in a research note published ahead of Samsung's earnings.

Samsung said Wednesday that a stronger won put a dent of about 650 billion won ($620 million) in its profit in the fourth quarter of 2017.

Trump's trade policies

U.S. trade policies could also add to Samsung's headaches.

Protectionist measures like those being touted by President Trump could lead to a weaker U.S. dollar and therefore a stronger won, according to Kim.

Trump already slapped heavy tariffs on U.S. imports of washing machines, which directly affects Samsung. The company called the move "a great loss for American consumers and workers."

Related: Washing machines are going to get more expensive

Leadership turmoil

Samsung's leadership has been battered by uncertainty.

The company's de facto leader, Lee Jae-yong, is currently in prison, serving a 5-year sentence for bribery and other corruption charges. Lee is appealing the court's decision.

Several other senior Samsung officials were also convicted.

And one of the company's most prominent executives — the man who's been running the booming memory chip business — is scheduled to step down in March.

That's part of a broader overhaul of Samsung's top management, adding to the uncertainty about what comes next.

CNNMoney (Hong Kong) First published January 31, 2018: 6:49 AM ET

Fujifilm and Xerox are cutting 10,000 jobs

The U.S.-Japanese partnership said it is slashing the jobs to survive in a "severe" market environment.

Fujifilm's secret to survival Fujifilm's secret to survival

Fujifilm and Xerox are set to lay off 10,000 workers from their joint venture in Asia.

The job cuts at Fuji Xerox are part of a wider restructuring that the company is undertaking in the face of increased competition, Fujifilm said in a statement on Wednesday.

"The market environment … has grown increasingly severe," the Japanese company said.

Fuji Xerox sells printers, copiers, production systems and software across the Asia-Pacific region.

Fujifilm (FUJIF)said the joint venture — of which it owns 75% — will eliminate the jobs in Japan and other markets starting this year. It expects to reduce annual costs by 50 billion yen ($460 million) in the process.

Xerox (XRX) owns the other 25% of the business.

CNNMoney (New Delhi) First published January 31, 2018: 3:57 AM ET

Line is launching its own bitcoin exchange

Popular messaging app Line plans to let its more than 170 million users trade virtual currencies through their smartphones.

How to buy and sell Bitcoin How to buy and sell Bitcoin

One of the biggest social networks in Asia wants to cash in on the bitcoin boom.

Popular messaging app Line (LN) said Wednesday it plans to launch an exchange that will allow its more than 170 million users to trade digital currencies via their smartphones.

It's the latest big name to get involved in the cryptocurrency industry, whose popularity exploded last year when bitcoin and other virtual coins soared in value.

"Cryptocurrency exchanges are making fat profits right now," said Koji Higashi, a Japanese bitcoin entrepreneur and commentator. "Mainstream companies such as Line are now trying to take advantage of this growing market."

Related: Overstock is turning into a bitcoin tech company

Other major social networks are taking a more cautious approach, though. Facebook (FB) said Tuesday it's banning cryptocurrency ads in a new policy designed to prevent scammers from taking advantage of users.

Line gave few details about its plans to set up its own exchange. But it said it has applied for a license with Japan's financial regulator.

The company already has a mobile wallet service called Line Pay, which lets users pay for goods and services using money stored in their account.

Line said Wednesday that it will also start selling other financial services, such as insurance and personal loans.

Investors were upbeat about the news. Line's stock rose gained 2.6% in Tokyo on Wednesday.

Related: So, why shouldn't I buy bitcoin?

Higashi said Line could succeed in attracting people wanting to trade digital currencies because it's already a well-known and trusted brand among Japanese consumers.

Japan has emerged as a hotbed for cryptocurrency activity. About a third of all trading in bitcoin at any one time takes place in Japanese yen, according to data from industry website CryptoCompare.

That popularity has been supported by the Japanese government's relatively hands-off approach to regulating the emerging industry. Authorities said last year they would recognize cryptocurrencies as legal tender and began licensing exchanges.

Related: $530 million cryptocurrency heist may be biggest ever

But it suffered a high-profile setback last week. Japanese exchange Coincheck said more than $500 million in the virtual currency NEM was stolen in a hack. It's thought to bethe biggest ever heist from a digital currency exchange.

The fallout from the huge theft could lead to closer scrutiny of Japanese exchanges by authorities, according to Higashi.

Bitcoin attacks fuel traders' frustrations Bitcoin attacks fuel traders' frustrations

Line went public in one of the hottest tech IPOs of 2016, raising more than $1 billion from investors from its listing in New York and Tokyo. The company is a subsidiary of South Korean tech firm Naver.

Line has struggled to attract new users since. Its number of monthly active users in Japan has fallen over the past year, while growth in key markets like Taiwan, Thailand and South Korea has been sluggish.

CNNMoney (Hong Kong) First published January 31, 2018: 3:07 AM ET

Facebook hit with lawsuit over murder posted online

The family of a slain Cleveland man believes Facebook could have done more to prevent his murder.

Russian trolls organized protests in Houston Russian trolls organized protests in Houston

The family of a slain Cleveland man believes Facebook could have done more to prevent his murder, according to a lawsuit filed earlier this month.

The killing of Robert Godwin, Sr., 74, was recorded and made viewable on the social network last April.

The family alleges in its lawsuit that Facebook is responsible for the wrongful death of Godwin due to its negligence. The lawsuit, filed in Cuyahoga County Clerk of Courts on January 19, says Facebook acted with "intentional, willful, malicious, in bad faith and in reckless disregard for the rights of Mr. Godwin."

Steve Stephens, the man who killed Godwin, announced his intent to kill someone on the platform prior to Godwin's murder, the complaint states. Stephens recorded the shooting and uploaded it to Facebook.

Stephens later logged onto Facebook Live, its livestreaming tool, and described the attack. He eventually killed himself after a police chase.

Video of the murder stayed up for more than two hours before it was removed by Facebook. The company, which relies on algorithms and human moderators to flag inappropriate and illegal content, has been criticized for the time it takes to respond to such content. Critics have said it relies too heavily on its users to flag posts.

At the time, the company said two hours had lapsed before users reported the video. Facebook disabled Stephens' account 23 minutes after that, the company said.

The complaint, filed by Godwin's daughter Debbie on behalf of the Godwin estate, names other Facebook-owned companies as defendants, including ad serving platform Atlas Solutions and CrowdTangle, a content discovery tool.

The lawsuit says Facebook has the ability to "cull, mine, analyze, and synthesize information" collected by individuals in real-time." Facebook "possessed this knowledge, and the ability to alert law enforcement, with more than sufficient time to act and prevent Robert Godwin, Sr.'s death," it asserts.

Related: Heath experts urge Facebook to shut down Messenger Kids

The issue of how Facebook moderates misuse of its platform has been a fraught one for the company.

Godwin's murder is just one example of how activity in the physical world can lead to questions about the responsibilities of digital platforms, and how what happens online could have real-life consequences. When a man murdered two Virginia journalists in August 2015, he filmed the crime and uploaded the video to Facebook and Twitter. Facebook and Twitter each suspended his accounts on their sites within minutes. In December 2016, a man investigating a conspiracy theory known as "Pizzagate" that was floated on a number of different websites fired several shots in a pizza restaurant in Washington, D.C. that was a subject of the false story.

"We want people to feel safe using Facebook, which is why we have policies in place prohibiting direct threats, attacks, serious threats of harm to public and personal safety and other criminal activity," Facebook associate general counsel Natalie Naugle said in a statement regarding the lawsuit.

"We give people tools to report content that violates our policies, and take swift action to remove violating content when it's reported to us. We sympathize with the victim's family, who suffered such a tragic and senseless loss."

CNNMoney (New York) First published January 30, 2018: 9:05 PM ET

Facebook bans ads promoting cryptocurrencies

The social network wants to cut down on fraud and scams.

Wolf of Wall Street's bitcoin warning Wolf of Wall Street's bitcoin warning

Facebook is banning ads that promote cryptocurrency.

In a blog post on Tuesday, the company outlined a new policy prohibiting ads that "promote financial products and services that are frequently associated with misleading or deceptive promotional practices."

This includes promotional ads for cryptocurrencies such as bitcoin, as well as Initial Coin Offerings, which give people the opportunity to buy into a new cryptocurrency.

The new policy is designed to prevent scammers from taking advantage of users. Facebook highlighted one potential such instance as an example of an ad that would not be allowed: "Use your retirement funds to buy bitcoin!"

Related: Hackers take advantage of bitcoin's wild ride

As public interest in bitcoin and other digital currencies has skyrocketed, Facebook (FB) users may have seen an uptick in ads for investing in cryptocurrencies. Late last year, bitcoin's popularity and value surged. In December, one bitcoin was worth $17,000. It has since fallen to $10,000.

A recent BuzzFeed News investigation found scammers were spreading fake news about cryptocurrencies on social media sites to increase the price of certain currencies.

"We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception," Facebook product management director Rob Leathern wrote in the blog post. "That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith."

A spokesman for Facebook said ad policies will be enforced through both automated and manual reviews, and ads that lead to websites where the main business model is cryptocurrency, ICOs, or binary options won't be allowed. Facebook users can also report ads that they believe violate the policy.

The Securities and Exchange Commission advised investors last year to be wary of ICO scams, and the agency is cracking down on fraudulent cryptocurrency schemes. Scammers have also created fake mobile apps to steal digital currencies.

Some cryptocurrencies and offerings for them are not scams, butFacebook said the new advertising policy is "intentionally broad." The companysaid it will revisit it in the future.

CNNMoney (San Francisco) First published January 30, 2018: 5:32 PM ET

Amazon’s Alexa can send SMS texts

A new texting option for Android users lets you send texts by voice from Alexa devices.

Amazon unveils new Alexa devices Amazon unveils new Alexa devices

Amazon's (AMZN) Alexa can now send SMS text messages, but only if you have an Android Phone.

It's the company's latest attempt to turn the voice-assistant devices from hubs for audible entertainment to full-fledged communication tools. It announced the new feature on Tuesday.

If your hands are full but you want a buddy to know you're running late, say "Alexa, text Bob," and then dictate your message. The recipient needs to be in your phone's contact list. Amazon says Alexa will then "find the best way to send the message." It might go out as SMS or through the existing Alexa messaging service.

The new feature is only available in the U.S. for now, and will only work if you have the Alexa app installed on an Android phone and have linked your phone with your Alexa device. Any texts you send will show up in your smartphone's text app. You can send them to any device that receives SMS, including iPhones.

Other voice assistants like Apple's (AAPL) Siri and Google (GOOGL)Assistant can send SMS texts from iOS and Android smartphones.

Amazon already supports a number of communication options from Echo devices. You can make phone calls to other Echo devices or most regular phone numbers in Canada, the U.S. and Mexico. Alexa devices and apps can already send text messages back and forth.

If you have an Android phone and want to start texting, you will have to turn the feature on. Open the Alexa app on your phone and go to the Conversations tab -> Contacts -> My Profile and turn on the Send SMS setting.

Currently there is no way to send emojis in texts through Alexa.

CNNMoney (San Francisco) First published January 30, 2018: 6:14 PM ET

An electric Harley-Davidson is coming in 2019

Read full story for latest details.

BMW imagines motorcycle of the future BMW imagines motorcycle of the future

Harley-Davidson, the American motorcycle manufacturer famous for its loud burbling, popping engine sounds, plans to release its first electric motorcycle within the next 18 months.

An electric motorcycle will, of course, not make burbling or popping noises. Instead it's more likely to emit a whirring sound. Harley revealed a prototype electric bike in 2014, but never said when the electric bike would hit the market.

The news came Tuesday in Harley-Davidson's annual financial report, which also laid out a plan to close the manufacturer's Kansas City, Missouri, assembly plant. That plant currently employs about 800. Bikes built there will now be assembled at Harley's York, Pennsylvania, plant where 450 jobs will be added.

Last year was a tough one for Harley-Davidson (HOG). Retail motorcycle sales declined by 6.7% globally and 8.5% in the United States.

harley davidson electric bike

A number of startup companies have already entered — or are getting ready to enter — the electric motorcycle business. Thanks to quick power delivery from electric motors, electric bikes promise to be fun. They should also be easier to use for new bikers, since electric motors don't require a transmission, so riders won't have have to learn how to shift gears.

BMW's self-balancing motorcycle of tomorrow

Riding range will be a challenge for electric motorcycles, though, said Mark Hoyer, editor-in-chief of CycleWorld magazine. The range of most electric bikes is plenty for day-to-day use but won't be enough for anyone who wants to take a long ride through the country.

He adds that what's been missing from the electric motorcycle market is a bike that has the quality and feel experienced riders are looking for. Startup companies generally don't have the experience and relationships with parts suppliers to provide that, he said. Having ridden the prototype bike, called Project Livewire, Hoyer said he expects Harley-Davidson will deliver a quality product.

"It's going to be a no-excuses, exhilaration Harley-Davidson Motorcycle," Harley-Davidson spokesman Michael Pflughoeft said of the new bike, which is still in development.

Like other Harley-Davidson bikes, the electric motorcycle will be a luxury product, but there is still no word on its price or what it will be called.

CNNMoney (New York) First published January 30, 2018: 4:01 PM ET

Apple probed by U.S. government over iPhone slowdown

Apple is facing scrutiny from the U.S. government for deliberately slowing down older phones.

Apple acknowledges updates slow older iPhones Apple acknowledges updates slow older iPhones

Apple is facing scrutiny from the U.S. government for deliberately slowing down older phones.

The Department of Justice has asked Apple (AAPL) for information related to its disclosure that it used software updates to slow the performance of older iPhones, according to a source familiar with the matter. The investigation is said to be in an early stage.

Bloomberg reported earlier Tuesday that the Justice Department and the Securities and Exchange Commission are now probing Apple over possible violations of securities laws.

Reps for the DOJ and the SEC declined to comment. Apple did not immediately respond to a request for comment.

Related: Apple apologizes for slowing iPhone, drops battery prices

Apple admitted last month that it used software updates to limit the performance of older iPhone models, including the iPhone 6, iPhone 6S, iPhone SE and iPhone 7.

The goal, according to the company, was to "smooth out" peak power demands and prevent older iPhones from sudden shutdowns as their lithium-ion batteries degrade. But it resulted in disappointing performance for users.

Apple's disclosure set off a backlash among consumer groups and government authorities around the world.

Senator John Thune, a Republican from South Dakota, criticized the company's lack of communication in a letter to Apple CEO Tim Cook.

"Even if Apple's actions were indeed only intended to avoid unexpected shutdowns in older phones … there should have been better transparency with respect to these practices," Thune wrote.

The public prosecutor's office in Paris has also begun investigating the slowdown following a complaint filed by a consumer advocacy group called Stop Planned Obsolescence.

apple us probe

For its part, Apple has apologized to customers over the software update and dropped the price of battery replacements. Last week, Apple teased a new software update that will give users the ability to opt out of the company slowing down their phones.

— CNNMoney's Donna Borak and Ivana Kottasová contributed to this report.

CNNMoney (New York) First published January 30, 2018: 4:30 PM ET

Harley-Davidson says an electric Hog is coming in 2019

The new electric motorcycle, based on the Project Livewire concept, should be ready to go on sale in the next 18 months, Harley-Davidson said.

BMW imagines motorcycle of the future BMW imagines motorcycle of the future

Harley-Davidson, the American motorcycle manufacturer famous for its loud burbling, popping engine sounds, plans to release its first electric motorcycle within the next 18 months.

An electric motorcycle will, of course, not make burbling or popping noises. Instead it's more likely to emit a whirring sound. Harley revealed a prototype electric bike in 2014, but never said when the electric bike would hit the market.

The news came Tuesday in Harley-Davidson's annual financial report, which also laid out a plan to close the manufacturer's Kansas City, Missouri, assembly plant. That plant currently employs about 800. Bikes built there will now be assembled at Harley's York, Pennsylvania, plant where 450 jobs will be added.

Last year was a tough one for Harley-Davidson (HOG). Retail motorcycle sales declined by 6.7% globally and 8.5% in the United States.

harley davidson electric bike

A number of startup companies have already entered — or are getting ready to enter — the electric motorcycle business. Thanks to quick power delivery from electric motors, electric bikes promise to be fun. They should also be easier to use for new bikers, since electric motors don't require a transmission, so riders won't have have to learn how to shift gears.

BMW's self-balancing motorcycle of tomorrow

Riding range will be a challenge for electric motorcycles, though, said Mark Hoyer, editor-in-chief of CycleWorld magazine. The range of most electric bikes is plenty for day-to-day use but won't be enough for anyone who wants to take a long ride through the country.

He adds that what's been missing from the electric motorcycle market is a bike that has the quality and feel experienced riders are looking for. Startup companies generally don't have the experience and relationships with parts suppliers to provide that, he said. Having ridden the prototype bike, called Project Livewire, Hoyer said he expects Harley-Davidson will deliver a quality product.

"It's going to be a no-excuses, exhilaration Harley-Davidson Motorcycle," Harley-Davidson spokesman Michael Pflughoeft said of the new bike, which is still in development.

Like other Harley-Davidson bikes, the electric motorcycle will be a luxury product, but there is still no word on its price or what it will be called.

CNNMoney (New York) First published January 30, 2018: 4:01 PM ET

Apple is set to report a giant profit. But iPhone X demand worries investors

Apple stock has slipped in recent days following a flurry of analyst notes and news reports raising concerns about demand for the pricey iPhone X in the year ahead.

iPhone X: First impressions iPhone X: First impressions

Wall Street is anxiously trying to figure out the X factor ahead of Apple's earnings report this week.

Apple (AAPL) stock has slipped following analyst notes and news reports that raised concerns about demand for the pricey iPhone X.

The company is rumored to be cutting production for the $999 smartphone by half for the first three months of 2018, according to reports this week from Japanese publication Nikkei and The Wall Street Journal.

The stock dipped about 2% on Monday and was down another 1% in midday trading Tuesday. The stock has fallen more than 5% over the last week.

Apple is scheduled to report earnings on Thursday. The company is expected to post record sales and profits for the final quarter of 2017, fueled by initial demand for the iPhone X as well as the iPhone 8 and 8 Plus, which went on sale in the fall.

But all eyes will be on the guidance Apple provides for sales in the upcoming quarter. There is growing concern among analysts that 2018 will get off to a weaker than expected start as demand for the new phones fizzles out.

iphone x thumbnail
The iPhone X

"Concerns about iPhone X sales have been well documented," Walter Piecyk, an analyst with BTIG, wrote in a research note Friday with the ominous title "How Bad Will Apple's Guidance Be."

The issue, he wrote, is whether Apple "can hit or even come close" to Wall Street's sales estimates this year if the iPhone X lags.

Apple declined a request for comment.

The iPhone X, named for the 10th anniversary of the smartphone, features a full bleed screen, eliminates the home button, and offers the option to unlock the device by scanning your face.

Apple had gone several years without making a major change to the iPhone's look and feel. Investors had hoped that the vastly redesigned device would help drive a "super cycle" of customers who upgrade their smartphones.

Now, analysts are pouring cold water on this theory.

"We have not been convinced that Apple would see a 'super cycle' in FY-18," Sherri Scribner, an analyst with Deutsche Bank, wrote Monday. "The phones were too expensive to drive massive adoption, consumers are keeping their phones longer because of their high cost … and the iPhone X features weren't enough to drive non-early adopters to buy new phones."

Related: iPhone X first impressions: The highs, lows and quirks

The iPhone X was a risky bet for Apple. It was Apple's most expensive iPhone to date and didn't go on sale until more than a month after the more affordable 8 and 8 Plus devices.

Apple itself hinted at some uncertainty with this approach.

"This is the first time we've ever been in the position that we've had three new iPhones at once like this at the top end of the line. And it's the first time we've had a staggered launch," Tim Cook, Apple's CEO, said in November. "And so we're going to see what happens."

apple event iphone x

Apple doesn't break out sales for specific models. Instead, investors will be looking at total iPhone units sold and the average selling price. The latter could offer a clue to how many consumers scooped up the $999 phone.

Even if Apple's sales end up lower than expected, investors may get a pleasant surprise from the tax bill signed late last year. The new law makes it cheaper for Apple to bring back the more than $250 billion in cash it holds overseas.

Apple said this month it would use some of that money to create 20,000 jobs and invest $30 billion in U.S. facilities over the next five years. But the company is also expected to use much of its cash pile to accelerate its stock buybacks and dividends for shareholders.

"Apple usually waits until April to update the capital return program but could accelerate the discussion," Steven Milunovich, an analyst with UBS, wrote in a note this week.

CNNMoney (New York) First published January 30, 2018: 3:02 PM ET