June 7, 2013
Samsung Stock Sinks Amid Rumors And Speculation
Michael Harper for redOrbit.com — Your Universe Online
It seems not even the golden child Samsung is immune to bad investor reports, slipping stock prices and reports about a supposed poorly performing flagship phone. Headlines today are marking a six-percent slide in stock prices for the South Korean tech company, leading to a massive $12 billion loss in total market value.
This is also the lowest their shares have been in four months, and some are blaming the sudden shift on an investor note from JPMorgan and the release of smaller versions of their new S4. This slip also comes nearly two weeks after the company boasted strong sales of their new iPhone challenger.
Some believe that the “stripped down” versions of the Galaxy S4 are to blame for the slip in sales. Samsung only announced their S4 smartphone during a wild Broadway-style press event in April. Since then the company has already announced two more S4 phones, the S4 Active and the S4 Mini. Both of these phones feature somewhat reduced internals from the original S4 and have likely been released in attempts to fight their Chinese competition.
Just as it sounds, the Mini is a smaller version of the S4, while the Active is a ruggedized and waterproof variant. According to Cnet, Samsung isn´t done releasing different versions of the S4 and also plans to release a camera-focused model called the Zoom.
Analysts are repeating the same thing they´ve been telling Apple for years; high-end handsets aren´t long for this earth.
“As the portion of low- to mid-range handsets is expected to increase in Samsung's overall mobile phone business, this has also sparked concerns about thinning margins and lower growth," said Kim Young-chan, an analyst at Shinhan Investment Corp in an interview with Reuters. Though Samsung´s many iterations of the same phone would likely fit in the mid-market range, investors are apparently worried that this means more volume and less profit for the Korean company.
While Reuters and their analysts blame falling profits from too many phones, the Wall Street Journal says traders became spooked after a JPMorgan analyst claimed sales of the original S4 have slowed.
J.J. Park wrote the note to investors on Thursday, admitting that sales in the third quarter would disappoint investors.
“Our supply chain checks show monthly orders have been cut 20%-30% to 7 to 8 million units (from 10 million) starting July,” wrote Park.
A 20 to 30 percent cut in orders marks a precipitous decline compared to the 10 million units sold in the first month after the device´s release. Previously the company was expected to ship some seven to eight million units per month through July to average nearly 80 million by the year´s end. Park now says they´ll only manage to sell 60 million.
Reuters also blamed an Apple rumor for the fall. Earlier this week Bloomberg reported that Apple would begin an iPhone trade-in program to allow owners of older models to upgrade to the newest version. Combined with a low-priced iPhone that many analysts and investors are hoping to see later this year, this could have dampened expectations of Samsung´s total dominance.