Top analyst predicts Samsung shares to continue dropping; investors advised to sell

“The slump in Samsung Electronics Co. (005930) that wiped out $28 billion of market value in six weeks will deepen as Apple Inc. (AAPL) and Chinese rivals take market share in handsets, according to the stock’s most-accurate forecaster,” Sharon Cho reports for Bloomberg.

“Shares of Suwon, South Korea-based Samsung fell 13 percent since Nov. 29, losing more market capitalization than any other company worldwide,” Cho reports. “The stock will sink another 11 percent, said Adnaan Ahmad, an analyst at Berenberg in London whose recommendations during the past 12 months produced the best return among forecasters tracked by Bloomberg.”

“Ahmad says investors will sell as operating profit margins at Samsung’s mobile business shrink,” Cho reports. “‘Selling is totally justified because the market now understands that the margin profile will change drastically,’ Ahmad, who has covered technology companies for 16 years at firms including Merrill Lynch & Co. and Morgan Stanley, said in a phone interview on Jan. 7. ‘Samsung is in a very precarious position in the next 12 to 18 months.’ … Sales of Samsung’s Galaxy S4 have slowed amid competition from the iPhone 5s and 5c, along with Chinese handsets priced as low as $100. Samsung also faces a new challenge in China after Apple struck a deal last month to sell the iPhone through China Mobile Ltd. (CHL), which had 763 million users at the end of November.”

Read more in the full article here.

MacDailyNews Take: Gee, that’s too bad. 🙂

[Thanks to MacDailyNews Reader “AlanAudio” for the heads up.]

25 Comments

  1. Surprise … to analysts maybe, but not to those of us who look at who is using, upgrading and buying on mobile, whether at Starbucks or in survey results.

    Seamless wide integration across life’s platforms is emerging and we know who has the lead.

    1. Happy days… not! Cheating is the core of Samsung’s business model – a complete ripoff of the iPhone, paying for deliberately rosy “surveys” from Strategy Analytics, Gartner, and IDC so it looks like Samsung was winning the sales war, lying about shipping numbers and passing them off as sales, oh, and not to mention truly inhuman conditions at Samsung-owned & operated factories. And now the cheating is coming unstuck as it always does, because the only way up is to actually innovate and succeed (not to mention that tablets are still a huge unprofitable disaster for them).
      It was easy to doubt that this was always going to happen, but it’s wonderful to watch. Now for all those tech writers and analysts who bought it, and took Samsung money. May they never regain any credibility.

  2. Fact is Samsung has little in mobile that can’t be copied for cheaper by its Chinese competitors who have hardly begun the fight at present. This is absolutely WHY Apple not competing at the lower end for market share purpose only would be a disaster. Simply seeing what happened to the Japanese manufacturers who held a very similar position to Samsung now struggling to be relevant should have been a clear enough warning.

  3. The thing that caught my eye in the linked article was how rapidly Samsung’s margins are declining – from 18% in Q3 2013 to an expected 13% by the same quarter this year.

    I’ve long felt that Samsung’s extravagant marketing budget is unsustainable and now that their operating profits are being rapidly eroded, there’s no way that they can continue spending so much on promotion. Without the same level of marketing, how will sales go ?

    Factor in the lukewarm reaction to the current Galaxy phone, plus the ridicule that greeted the Galaxy Gear and it makes the launch of the next Galaxy model a crucial point for the company. If they don’t produce a winner, they’re in deep trouble.

    1. I’m not aware of them making any predictions about AAPL since Mar 2013.

      Their opinions at that time were clouded by the fact that they believed that an erosion of market share from cheaper competitors would be a bad thing for Apple. Analysts are now starting to understand that making sustainable profits is rather a good thing and that market share is not so important if you’re not making decent profits on every sale.

    1. Not if Intel is about to do what I think they are. They are about to complete a second new 1.1 million square foot fab facility in Portland, OR. Who has a need for massive domestic chip production besides Apple?

  4. And if Apple continues its gradual withdrawl from contracting with Samsung to produce components for its iPhones & iPads, that will cause Samsung to implode. There was an earlier story some weeks ago that MDN posted reporting that smartphones make up two-thirds of Samsung’s business. Really? So much for Samsung being a diversified [copycat] manufacturer. Can’t wait for Karma to take its toll.

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