Samsung's Q4 Earnings: Weakness In Smartphones Could Be Tempered By Semiconductor Growth
- Samsung is expected to publish its Q4 2014 earnings on Thursday.
- The company has provided preliminary earnings guidance numbers, indicating that consolidated sales could dip by roughly 12% year-over-year.
- Trefis has a $1,170 price estimate for Samsung, which is slightly below the current market price.
- Processors are not a top purchase driver among smartphone buyers. Using or not Using Qualcomm processors is of little influence in Samsung’s phone sales.
- The Exynos 7 Octa processor is good enough for the upcoming Samsung Galaxy 6.
- Xiaomi’s legal trouble with Ericsson might be good for Samsung’s global sales.
- Samsung is rumored to become the main supplier of application processors for Apple's new iPhone 7, replacing TMSC.
- Last week sources claimed Samsung was replacing Qualcomm's Snapdragon chip inside the Galaxy S5 for the Exynos which is made in-house.
- As Samsung grows its semiconductor business, I expect it to seek more market share in DRAM and NAND, hurting Micron.
- Micron remains a hold.
- BlackBerry's claim that it has not engaged in buyout talks with Samsung is strengthened by the release of the latter’s first Tizen smartphone in India.
- Samsung still sees potential in Tizen OS phones.
- The Samsung Z1 Tizen phone is cheaper than Google’s Android One handsets.
- Android apps can run on the Samsung Z1 through OpenMobile’s Application Control Layer technology.
Why Acquiring BlackBerry Would Make Sense For Samsung
- By acquiring BlackBerry, Samsung could find new avenues for growth, gaining credibility and deeper relationships with enterprise customers and users in highly regulated verticals.
- BlackBerry could help to give Samsung a leg up over Apple and Android devices, which still trails behind BlackBerry in terms of security.
- BlackBerry’s basic patents, which are likely to cover some foundation mobile communication technologies, could prove useful as a bargaining chip for Samsung in the event of litigation with rival manufacturers.
- Samsung will benefit a lot from owning BlackBerry.
- Samsung can use BlacKBerry's QNX and Elliptic Curve Cryptography assets to build the most secure Machine-to-Machine communication solutions.
- Samsung can outrun Google in the connected car segment if Samsung owns QNX. QNX is the leading OS in connected cars.
- Samsung warned that operating profit for December 2014 quarter-end was off 37%.
- Smartphone sales may still be in free fall amid competition from Apple, Xiaomi and Lenovo.
- Samsung is attempting to diversity its revenue stream, but investors should still avoid the stock.
Why Samsung Is Betting Big On The Internet Of Things
- Samsung intends to play a key role in the IoT market, with the intention to equip 90% of all its devices with IoT capabilities by 2017.
- According to research firm IDC, the global market for Internet of things-capable devices and services could cross $7 trillion by the year 2020.
- Trefis has a $1170 price estimate for Samsung, which is slightly below the current market price.
Samsung Dials Into Vietnam, Repositions Itself For Investors
- Samsung has decided to take on increasingly low-cost products by expanding its operations by $3 billion in Vietnam.
- Samsung enjoys a favorable regulatory environment in Vietnam with the government exempting them from corporate taxes for 4+ years.
- Although Samsung's results have been slightly disappointing, investors might consider the recent dip a buying opportunity.
- Samsung's consistent and increasing dividends could also be attractive for income-oriented investors.
Samsung Could Refocus Growth Strategy As Q3 Earnings Plummet
- Samsung's smartphone business faces its biggest test yet, challenged by the arrival of Apple's large-screen iPhones and increasing competition from budget offerings.
- Semiconductor operations did well, aided by strong DRAM and NAND memory shipments.
- The consumer electronics division was weighed down by seasonally lower sales for appliances and lower pricing for televisions.
Mobile Business Slump Forcing Samsung To Refocus Its Strategy
- Samsung’s pre-earning guidance for Q3 2014 indicated that sales and operating profits are declining due to an underperforming mobile segment.
- The company is losing market share, and is expected to face further declines, as competition in the market for Smartphones intensifies and smaller brands continue to outperform Samsung’s phones.
- Samsung’s chip business seems to be doing well and has reported strong growth in its pre-earnings guidance. In order to capitalize on this, the company has made a $15 billion investment in a new South Korean chip plant.
- Share prices have declined by nearly 20% in the past four months and the company has lost almost $45 billion in capitalization.
- Outlook for the stock seems to be bearish and investment is not recommended primarily because challenges in mobile (the main segment for the business) are going to continue.
With Sales In Freefall, Will Samsung Smartphones Go The Way Of BlackBerry And Nokia?
- Samsung warned that Q3 profit could decline by as much as 60% Y/Y. Its smartphone business is the worst performer.
- Smartphones are being hit on the low end by Chinese competitors and on the high end by Apple.
- Samsung's sharp decline is reminiscent of Nokia and BlackBerry, both of which once held commanding market share.
- If sales continue their freefall over the next several quarters, Samsung's smartphones could go the way of Nokia and BlackBerry.
Samsung's Chip Expansion Antagonistic For Micron? Wall Street, 'The Crowd' At Odds
- Wall Street and certain members of the crowd are at odds over Samsung's intentions for its new $15B chip plant.
- Analysts believe Samsung is gearing up to supply explosive demand in memory, in particular, demand for the 2015 iPhone.
- Certain crowd members believe Samsung could attempt to steal share in semiconductors to offset losses in mobile phones. I am riding with the crowd.
Samsung Warns Of Weak Third Quarter As Rivals Gain Momentum
- Samsung came out with a profit warning for the third quarter after disappointing in Q2.
- Rivals are pinching the company's market share on both the high and the low end.
- Apple's new iPhone is expected to put even more pressure on Samsung's sales.
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Dec. 24, 2014, 8:38 AM
- Samsung Electronics (OTC:SSNLF) strikes a deal with Sony (NYSE:SNE) to bring PlayStation Now to certain Smart TV models next year.
- The partnership is part of Sony's strategy to open up the PlayStation system to non-Sony devices.
- PS Now will be accessible through an app on the Samsung Smart Hut interface.
- The companies plan to give a sneak peek at the innovation at CES in January.
Dec. 19, 2014, 4:04 AM
- Looking to boost returns to shareholders amid a slump in earnings, Samsung Electronics (OTC:SSNLF, OTC:SSNGY) is considering increasing its full-year dividend by as much as 50%. A final decision will be made by its board at the end of January.
- The dividend announcement comes less than a month after the electronics maker said it will buy back $2B of stock amid a company-wide restructuring.
- Samsung paid out 14,300 won ($13) per share in dividends last year.
Dec. 16, 2014, 11:49 AM
- Re/code reports Samsung (OTC:SSNLF) is talking with offline payments startup LoopPay about launching an Apple Pay rival that would work with virtually all credit/debit card terminals in existence.
- Whereas Apple Pay relies on NFC radios to transmit payment data (and thus requires terminals to support NFC), LoopPay's solution transmits a magnetic signal similar to that of a swiped card. Though the technology currently requires a card case or fob to work, Samsung (and other OEMs) could integrate it into future phones.
- Visa is a LoopPay investor. CEO Will Graylin recently promised LoopPay's tech would be embedded into a 2015 smartphone that would have "massive penetration," but didn't name the maker. He added the deal would also allow LoopPay to work with NFC, which could prove crucial as retailers phase out standard card swipes in favor of chip-and-PIN (EMV) terminals.
Dec. 11, 2014, 1:54 PM
- Thanks to Apple's huge A8 CPU orders, TSMC (TSM +0.6%) had November revenue of $2.32B, -10.5% M/M (seasonality) but +64.1% Y/Y. October sales were up 55.9% Y/Y.
- Sources tell Digitimes sales are also expected to fall M/M in December, but add TSMC is still set to hit Q4 revenue guidance of NT$117B-$120B ($3.74B-$3.84B).
- Meanwhile, Samsung (OTC:SSNLF) has begun producing chips using its next-gen 14nm FinFET process for an unnamed client (quite possibly Apple), a little earlier than expected. The process is expected to be used to make Apple's A9 CPU (going into 2015 iDevices), as well as upcoming Qualcomm processors.
- TSMC might also be responsible for some A9 output, via its 16nm FinFET process (set to enter mass-production in Q2 2015).
Dec. 10, 2014, 6:21 AM
- Samsung Electronics (OTC:SSNLF, OTC:SSNGY) is merging Samsung Electronics America and Samsung Telecommunications America, two sales subsidiaries in the U.S., to enhance efficiency and streamline its organization.
- The move follows a recent reshuffle of Samsung Electronics' senior management and the trimming of its smartphone portfolio to combat declining profit.
Dec. 2, 2014, 4:11 AM
- Samsung Electronics (OTC:SSNLF, OTC:SSNGY) is selling its fiber optics business to U.S. glass panel supplier Corning (NYSE:GLW).
- The sale includes Samsung Electronics' production facilities for the business in China and South Korea, a company spokeswoman said, although she declined to comment on details of the sale, including the price.
Dec. 1, 2014, 2:11 AM
- Samsung Electronics (OTC:SSNLF, OTC:SSNGY) announced a modest reshuffle at its business units today that leaves almost all of its key unit chiefs in place, disappointing investors who had hoped for a major management shake-up amid slumping market share and profits.
- The South Korean company opted not to jettison J.K. Shin, chief executive of its mobile division, or his two co-chief executives – B.K. Yoon and Kwon Oh-hyun, who head the component and consumer electronics businesses respectively.
- Previously: Management shake-up at Samsung, mobile chief likely to be replaced
Nov. 26, 2014, 9:14 AM
- Samsung's (OTC:SSNLF) buyback is its first since 2007, and is equal to over 1% of a current market cap of $184B. The tech/electronics giant will buy back 1.65M common shares and 250K preferred shares.
- The buyback comes with Samsung's shares down over 20% from their early-2013 highs due to mobile share losses/price pressure. Bulls have argued the company's chip and display ops remain in good shape - the former has been buoyed by strong DRAM/NAND sales.
Nov. 26, 2014, 2:37 AM
- Just a day after it was revealed that Samsung Electronics (OTC:SSNLF, OTC:SSNGY) is planning a major management shake-up next month, Samsung has announced that it will sell controlling stakes in its chemical and defense units for 1.9T won ($1.7B).
- Samsung affiliates, including Samsung Electronics, will sell a combined 57.6% stake in Samsung General Chemicals and a 32.4% stake in Samsung Techwin to Korean conglomerate Hanwha Group.
- Update: Samsung will buy back shares valued at 2.19T won ($2B) following the sale.
Nov. 24, 2014, 5:22 AM
- Samsung Electronics (OTC:SSNLF, OTC:SSNGY) is planning a major management shake-up next month, as Lee Jae-yong, the technology group’s presumed heir, looks to cement his control over the company as his father remains hospitalized following a heart attack in May.
- The leadership changes, likely to be announced next week, could declare the replacement of Shin Jong-kyun, head of the group's mobile division.
- Last month, Samsung reported its weakest quarterly earnings in three years, prompting the group to cut back on its smartphone portfolio.
Nov. 18, 2014, 5:52 PM
- In addition to launching fewer smartphone models (thus providing more manufacturing scale for the models that are launched), Samsung (OTC:SSNLF) plans to improve its mobile cost-competitiveness by lowering OLED display costs.
- Samsung Display exec Lee Chang-hoon: "One of the superior things about AMOLED is that [because it has no backlight] it can become cheaper to produce compared to LCD. We are prepared to compete directly with LCD."
- Lee adds Samsung Display, which depends heavily on Samsung Electronics for OLED sales, hopes to get half its OLED sales from other customers in three years. Universal Display (NASDAQ:OLED) would be pleased if that happened.
- Also: Samsung plans to offer a flexible display that can be folded in half (previous) by year's end. However, the company's production targets are modest for now: It's looking to make just 30K-40K flexible displays per month by the end of 2015.
- Universal closed up 4.3% today. Shares fell two weeks ago after Universal disclosed (along with its Q3 results) Samsung isn't using its green host materials in certain new products (the Note 4 is a strong possibility). On its earnings CC (transcript), Universal said it's working on "higher-performing cost-effective next-generation emitter and hosting systems."
Nov. 18, 2014, 2:15 AM
- In a move to combat declining profit and high costs, Samsung (OTC:SSNLF, OTC:SSNGY) is cutting the number of smartphone models it offers next year by 25% to 30%. In October, Samsung reported a 49% drop in Q3 net profit.
- The decision will help Samsung reduce its large smartphone portfolio and better compete with cheaper models from rivals, such as Xiaomi.
Nov. 17, 2014, 5:27 PM
- BMO's Keith Bachman reports seeing improved U.S. iPhone 6 (NASDAQ:AAPL) supplies. "Whereas the iPhone 6 Plus was very hard to find a few weeks ago, supply has improved ... Whereas Apple stores were sold out of virtually all iPhone 6 models a few weeks ago, retail stores now appear to have almost half of the iPhone 6 models across the various carriers available for walk-in."
- Bachman does note there's still "virtually no available stock of iPhone 6 at carrier partner stores, such as AT&T and Verizon." However, online wait times at carrier stores have fallen in half to ~10 days.
- Apple's U.S. site typically shows wait times of 7-10 days for the iPhone 6, and 3-4 weeks for the 6 Plus. In October, there were multiple reports stating Apple is boosting 6 Plus production.
- Apple has added UnionPay, China's dominant payment-processor, as an App Store payment option. UnionPay credit/debit card holders will be able to link their cards with their Apple IDs, something Internet software/services chief Eddy Cue calls "one of the most requested features from [Apple's] customers in China." Quartz notes the agreement could pave the way for an Apple Pay deal.
- The Korea Times reports Samsung (OTC:SSNLF) will supply 80% of Apple's A-series app processors starting in 2016, thanks to a new agreement.
- While TSMC (NYSE:TSM) is manufacturing Apple's 20nm A8 processors, Samsung has been expected to supply a large portion (if not all) of Apple's A9 processors, leveraging a 14nm FinFET (3D transistor) process it's developing with Globalfoundries.
Nov. 13, 2014, 2:17 PM
- DirecTV (DTV +0.2%) will be the first pay-TV major to offer 4K UltraHD content to its subscriber base beginning tomorrow.
- 19 films from Paramount Pictures and K2 Communications will be available initially in the format.
- The company tipped off during its earnings conference call last week that 4K channels will be introduced in 2015.
- Samsung (OTC:SSNLF, OTC:SSNGY) is a partner with DirecTV on the UHD initiative.
- DirecTV earnings call transcript
Nov. 12, 2014, 7:12 AM| Comment!
Nov. 10, 2014, 2:38 AM
- Samsung Electronics (OTC:SSNLF, OTC:SSNGY) is planning on building a $3B smartphone plant in northern Vietnam, bringing the company's total investment pledges in the country this year to around $11B.
- Samsung has been increasing production in Vietnam to reduce costs and better compete with the low-priced smartphones of Chinese rivals.
- The factory will be built in the Thai Nguyen province, where it opened a $2B smartphone plant in March.
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