Samsung Electronics Co. Ltd (KRX:005935), is the giant of the Smartphone market, it is considered as Top-notch leader when it comes to product innovation, Range and quality. The Company had a very compelling history; it challenged companies like Apple Inc (AAPL), HTC Corp (TPE:2498)and Sony Corporation (NYSE:SNE)and came up with the best of the best products.
Analyst firm Reuter claims that Samsung lost $12 billion in market value on Friday, due to concerns that the two stripped-down versions of the Galaxy S4 variants will have an adverse effect on its profit margin.
Samsung’s shares fell 6.2% this week and reached their lowest point for four months, losing 14 trillion won ($12 billion) off the company’s market value, and the present market value sits at 210.2 trillion won ($ 118 billion).
Kim Young-Chan, an analyst at Shinhan investment Corp said that “Sales of high-end handsets are lagging behind expectations, while low-to-mid-end handsets are selling briskly worldwide.
According to a report, Samsung’s Arch rival Apple will start a trade-in program for iPhones. The plan is to attract users and to allow users to trade their older iPhones for the newest model, and the news about the launch of iPhone 5 with a new iOS 7 and the rumor of cheap iPhone are acting as a constraint for Samsung’s growth.
The Brokerage has sloped this week, there has been a 4.8 percent cut in the Samsung’s price target to 2.0 million won ($1.5 million) from Woori Securities. There was a weak profit growth for Samsung’s mobile business, which creates around 70 percent of its total earnings. And there was also a cut in 2013 and 2014 earnings per share forecasts by 9.2 percent and 11.7 percent. There are also concerns about thinning margins and lower growth, as the portion of low-to-mid-range handsets is expected to increase in Samsung’s overall mobile phone business.
JPMorgan had given a monthly order estimation of 7-8 million Galaxy S4 units in July, due to a weaker demand in Europe and South Korea it slashed its earning estimation by 20-30 percent.
Vindications For The Loss
It’s been less than three months since Samsung announced the Galaxy S4 at an event in New York, and already announced another two Galaxy S4 variants i.e. Galaxy S4 Mini and the Galaxy S4 Active and there was another confirmation from the company about releasing S4 with Stock Android option as well.
The concern here is that these Galaxy S4 variants will have a negative impact on the profits of Samsung’s Smartphone business; S4 mini has more or less similar features of S4 and is available in a cheaper price so people would prefer buying S4 mini than the original S4.
Last time when S3 mini was launched, the device failed to meet the user’s expectations so Samsung is repeating its mistake again by launching S4 mini.
According to a report, before the launch of Galaxy S4, the Smartphone giant had estimated to ship around 100 million units of Samsung Galaxy S4 in 2013, but after the launch of S4, there was another report stating that it could manage to ship only 80 million units.
Samsung has done many things right, it has launched wide range of products, the products, its feature everything is innovative but Samsung is going wrong with its product timings, by offering too many Galaxy S4 variants at the same time it is confusing the users in terms of choice, there has to be a certain time gap between the products, when it comes to time gap, Samsung has to follow Apple’s footsteps.