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Barron's: Samsung near a bottom with major upside ahead

  • Amid evaporating profits from its key mobile phones operation, Samsung (OTC:SSNLF, OTC:SSNGY) has fallen out of favor with investors thinking the company could be the next Motorola, Nokia, or BlackBerry, writes Andrew Bary. Another view, however, says Samsung looks more like Apple from a year and a half ago when it's stock plunged below $60 (split-adjusted), and traded at 6.5x earnings (excluding cash). Samsung today sells for 4.8x earnings, net of a $60B pile of cash and investments.
  • "[Samsung's] semiconductor division and the cash are worth more than the current market cap," says Bernstein's Mark Newman, meaning investors are getting for free the world's largest maker of handsets, the leading display business, and the largest and most profitable TV maker.
  • With $60B in cash against a $150B market cap (Apple has $133B and a $608B market cap), Samsung could find itself the target of an activist investor seeking share repurchases or a boost in the dividend (current yield 1.3%), but then again the Carl Icahns of this world can't as easily pressure family-controlled Korean companies the way they can Apple.
  • The last word goes to CLSA's bullish Shaun Cochran: "It is ludicrous to compare Samsung to Nokia, BlackBerry, or Motorola ... Samsung has a history of reinventing itself time and time again. There is an institutional paranoia, a constant sense of crisis that has helped make Samsung so great.”

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