Concerns About Samsung’s Galaxy S4
Reuters’ Miyoung Kim reports that several brokers have downgraded shares of Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), expressing concerns that sales of the Galaxy S4 are already slowing down. The device has only been on the market for a few months.
The company’s stock has fallen more than 6 percent since it launched two less-expensive versions of the Galaxy S4, which is creating even more concern that the company’s profit margins will suffer. Sound familiar again? This is the very issue Apple Inc. (NASDAQ:AAPL) investors are worrying about as talk of a less expensive iPhone circulates through the market.
Bad News For Samsung’s Stock Price
Shares of Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) closed out the trading day at their lowest level in four months. The fall in value eliminated 12 trillion won, bringing the company’s market cap down to 210.2 trillion won or $188 billion.
Apple Inc. (NASDAQ:AAPL)’s market cap dipped below $400 billion earlier this year, and it was surpassed by Exxon Mobil Corporation (NYSE:XOM) as the most valuable company. Apple has since come back on top.
Downgrades For Samsung
According to Reuters, there were several downgrades for Samsung this week, including Woori Securities’ 4.8 percent slash in the company’s price target, which brought their target to 2 million won. The firm said it made the cut due to weakening profit growth for the company’s mobile business, which accounts for about 70 percent of its earnings. Woori Securities also slashed earnings per share estimates for this year by 9.2 percent and next year by 11.7 percent.
Analysts at JPMorgan lowered their earnings estimates as well, saying that monthly Galaxy S4 orders have been reduced by between 20 and 30 percent to between 7 and 8 million. The firm attributed its cuts to weak demand both in South Korea and Europe.