Early Friday Samsung issued a sales and earnings outlook for the second quarter of 2013. The Korean firm’s estimate for sales is 56 – 58 trillion won and the estimate for operating profits is 9.3 – 9.7 trillion won. These numbers represent an 18% increase in sales and 44% increase in operating profits over the second quarter last year.
Stocks do not move based on absolute earnings and revenues, but they move based on the differential between the reality and analysts’ estimates. As good as Samsung’s numbers are they are below consensus estimates, just like Apple AAPL (AAPL) earnings over the last couple of quarters. Shares of Samsung were down about 4% in Seoul, Korea. Samsung’s market value has now declined about 17% in 2013.
Unlike Apple, Samsung is a highly diversified company producing everything from smartphones to TVs. However, just like Apple, Samsung’s profits are highly dependent on high end phones.
The market has dramatically shifted and it is no longer about superiority of one phone over another. The market for high end smartphones is near saturation and the opportunity is waning. There is a growing appetite for high end smartphones in the emerging markets but low discretionary incomes in these markets makes it difficult to move the needle on total number of high end smartphone sales. It becomes a matter of personal preference between simplicity and elegance of Apple vs. flexibility and power of Android.
Galaxy S4 has been very popular. It sold 10 million units in the first 27 days after its introduction in April 2013…Read more at Forbes
