By Miyoung Kim
SEOUL (Reuters) – Samsung Electronics Co Ltd missed already medium expectations for a quarterly gain superintendence on Friday, deepening worries that a smartphone business might have peaked, as expansion in sales of a blockbuster Galaxy phones starts to decline and new rivals emerge to eat divided during a marketplace share.
The Galaxy S, powered by Google’s giveaway Android platform, propelled a South Korean organisation into a tip arrange of smartphone makers in 2012, overtaking Apple Inc whose iPhone had set an courtesy customary 5 years earlier.
Now investors fear Samsung might also follow in a footsteps of Apple and other once-mighty players that are struggling with timorous margins, in an courtesy where companies live and die by their ability to stay brazen of a creation curve.
“Is Samsung’s smartphone story now over? Not utterly yet. It’s expansion is indeed negligence due mostly to unsatisfactory sales of a S4,” pronounced Jung Sang-jin, a account manager during Dongbu Asset Management, that owns Samsung shares.
“Yet we consider Samsung has some sparkling things adult a sleeves. The problem is no one is certain either these products can unequivocally wow investors and consumers.”
The unsatisfactory gain guess by Samsung, that has had a lane record of violence even a many bullish forecasts, sent a shares down some-more than 3 percent on Friday.
They have forsaken 17 percent given early June, strike by a array of brokerage downgrades. The share cost reflects concerns about Samsung’s handset margins, with a mobile business generating 70 percent of a tech giant’s sum profit.
The tumble in a share cost equates to a dump in marketplace value of 39 trillion won ($34.2 billion), or value a sum marketplace capitalisation of Sony Corp and LG Electronics Inc.
“One of a biggest risks for Samsung Electronics going brazen is that 70 percent of sum handling distinction comes from mobile business. Diversification is key. Samsung needs to rivet in active business transition until end-2014,” pronounced Jeff Kim, an researcher during Hyundai Securities.
ALL TIME HIGH AGAIN IN H2?
To be sure, Samsung’s 9.5 trillion won ($8.3 billion) handling distinction forecast, adult 47 percent from a year ago, is a record and it is approaching to news aloft gain in a stream and fourth buliding as sales of a latest Galaxy S4 phone collect adult and new products strike a stores. Prices of memory chips, another courtesy that Samsung binds a lead, are also approaching to sojourn strong.
“Samsung’s got diversified businesses. When one business lags, it’s got others outperforming and propping adult a altogether profit,” Jung during Dongbu said.
“The member business is widely approaching to collect adult a tardy in a second half when smartphones slow, though now worries are also ascent that a member business’ liberation could be short-lived.”
The guidance, expelled brazen of full quarterly formula due on Jul 26, was worse than an normal foresee of 10.16 trillion won in a check of 43 analysts by Thomson Reuters I/B/E/S.
“I consider Samsung spent some-more on selling losses than approaching since of a launch of Galaxy S4 smartphone, that led a company’s formula to skip a marketplace consensus,” HMC Investment Securities researcher Nho Geun-Chang said.
Samsung spent some-more on selling than RD in 2012 for a initial time in during slightest 3 years, and a S4 was launched in Mar with a Broadway-style uncover in New York.
The association also invested heavily in placement channels including opening code shops in 1,400 Best Buy stores in a United States.
But a glitz and glorious has unsuccessful to detain a slip in handset sales growth, and shipments are seen rising usually 4 percent to 8 percent in a second entertain from a prior quarter.
Handset margins are also being squeezed, as consumers in countries like China – a world’s biggest smartphone marketplace – opt for stripped-down cheaper devices.
NEXT BIG THING
Competition is removing heated with Chinese manufacturers such as Huawei Technologies Co Ltd and ZTE Corp creation belligerent in a renouned mid- to low-end market.
Nokia Oyj, once a handset king, denounced dual back-to-basics 3G phones this week. They concede entrance to renouned applications such as Facebook and Twitter, and sell for only $68.
“There’s still a large doubt about how Samsung will respond to a low-end market,” pronounced Brian Park, an researcher during Tong Yang Securities, referring to a skeleton to launch a device formed on a open-source Tizen handling system.
Wearable gadgets will also be essential to a company’s hopes of roving a new call of unusual distinction growth.
Apple has practical for a heading for “iWatch” in Japan, signaling a iPhone-maker might be relocating brazen with skeleton for a watch-like device as a courtesy spin a courtesy to wearable computers.
Samsung has also filed a heading for “Samsung Gear” in a Untied States for a operation of wearable devices.
“The (expected launch of) wearable inclination won’t be means to reinstate Samsung’s smartphone business, though it’s some-more expected to element a gain during best,” pronounced Byun Han-joon, an researcher during KB Investment Securities.
($1 = 1139.2000 Korean won)
(Additional stating by Joyce Lee and Hyunjoo Jin; Editing by Stephen Coates)
Article source: http://au.news.yahoo.com/technology/news/article/-/17877815/samsung-estimates-q2-record-profit-misses-forecast/