SAMSUNG CSC

Samsung appears to be experiencing a taste of those stock market jitters that seems to defy logic, with it’s market value reduced by $12b – 6 percent of its value – in a single day’s trading, reports Reuters.

The share slide of more than 6 percent comes after it recently introduced two stripped-down versions of the S4, fanning worries that profit margins for its mobile business will suffer. It also follows a report that arch-rival Apple will begin a trade-in program for iPhones.

The new stripped-down S4 models will help it widen its lead in the global smartphone market and fend off Chinese competitors, but some fear that the South Korean tech giant is trading in profits for volume … 

While there’s some logic to concerns about the impact of a major competitor introducing a trade-in program (reported yesterday over on 9to5Mac), the idea that launching the S4 mini and S4 Active should make the company less valuable seems somewhat misguided. Sure, some potential S4 buyers will opt for the cheaper S4 mini instead, but they’ve also opened up the market of those who want their phones to be phone-sized rather than phablets.

Samsung also seems to be suffering from ‘the Apple effect’, as the market punishes record-breaking performance simply because the numbers were lower than some analysts predicted.

“Sales of high-end handsets are lagging behind expectations, while low- to mid-end handsets are selling briskly worldwide,” said Kim Young-chan, an analyst at Shinhan Investment Corp.

“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.”

Samsung’s market cap ended the day at $188b.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s