Samsung drops $10 billion in market value on poor demand for Galaxy S6 phones
“Sluggish sales of Samsung Electronics Co.’s Galaxy S6 smartphones helped trigger a share decline that wiped more than $10 billion from its market value in July — almost twice the capitalization of local rival LG Electronics Inc.,” Jungah Lee reports for Bloomberg. “The stock dropped 6.6 percent this month as the world’s biggest smartphone maker posted its fifth straight profit decline and said it would cut prices for its new high-end devices less than four months after their debut.”
“Samsung’s global smartphone market share fell more than 3 percentage points in the second quarter amid surging sales of Apple Inc.’s iPhones and tougher competition from Chinese vendors,” Lee reports. “‘I don’t see a clear answer for its smartphone business,’ said Marcello Ahn, a Seoul-based analyst at Quad Investment Management Co. ‘The vacuum of its business momentum will persist throughout this year and even into next year, giving investors less reason to snap up shares.'”
“Samsung will be ‘adjusting’ prices for the S6 and S6 Edge to maintain sales growth, the company said Thursday after reporting that net income, excluding minority interests, fell to 5.63 trillion won ($4.9 billion) in the three months ended June,” Lee reports. “That missed estimates and prompted the biggest decline in shares in four months.”
MacDailyNews Take: So, in order to keep the unit count up, move from from low margins to no margins or even to losing money on every sale? Genius business move, patent- and trade dress-infringing slavish copier! Genius!
“The 6.6 percent decline wiped out more from Samsung’s market value that the company has ever posted in quarterly operating profit,” Lee reports. “Samsung will add more middle- and low-end models, and cut spending in the phone division, it said.”
MacDailyNews Take: “Samsung will add more middle- and low-end models, and cut spending in the phone division.” Translation: Samsung can’t compete with Apple’s iPhone.
